A former security engineer, Shakeeb Ahmed, has been jailed for three years for his role in appropriating over $12 million from two cryptocurrency exchanges. The sentencing was given by a federal judge who also imposed a three-year period of supervised release.

Details of the Crypto Exchange Hacks

Shakeeb Ahmed was arrested and charged with wire fraud and money laundering for stealing approximately $9 million from Crema Finance, a decentralized cryptocurrency exchange (DEX) built on the Solana blockchain.

SHAKEEB AHMED was sentenced today by a U.S. District Judge to three years in prison for hacking two separate DEXs and stealing more than $12 million worth of cryptocurrency, marking the first-ever U.S. conviction for hacking a smart contract. One such DEX is Nirvana Finance.…

— Wu Blockchain (@WuBlockchain) April 12, 2024

His technique consisted of altering smart contracts by injecting false pricing information that enabled him to withdraw excessive fees. The US Department of Justice specified that Ahmed performed 21 flash loans and made huge unauthorized revenues by exploiting the DEX liquidity pool.

Apart from the Crema Finance hack, Ahmed was part of another robbery from Nirvana Finance that enabled him to steal more than $12 million. Pleading guilty to the charge of computer fraud, Ahmed was arrested in July 2022, and his trial took place in December of the same year.

Shakeeb Ahmed Sentencing and Restitution

While passing the sentence, federal prosecutors initially suggested a four-year prison term, which took the heinous nature of the crimes into account, but Ahmed was taken into consideration for his cooperation. The judge gave Ahmed a three-year jail term and directed him to forfeit $12.3 million and pay $5 million in restitution.

The defense presented by Ahmed’s attorney sought for leniency because he had voluntarily disclosed his second hack on Nirvana Finance, an admission that he knew could make the court revoke his plea deal. Nevertheless, the court provided for a custodial sentence to emphasize the gravity of the acts he had committed.

Impact on the Cryptocurrency Industry

The case is noted as the first conviction associated with the hack of a smart contract by U.S. Attorney Damian Williams. It highlights the legal problems and growing precedents concerning cyber security and fraud within the more closely observed cryptocurrency industry.

Prosecution of such cases is aimed at providing a certain direction regarding the legal implications of participating in cyber theft and manipulating the technological infrastructures used in digital currencies.

Ahmed’s sentencing, consequently, highlights the ongoing efforts by law enforcement agencies to trace and prosecute individuals exploiting the digital finance space, regardless of the sophistication of their techniques.

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The post Ex-Security Engineer Gets 3-Year Sentence for $12M Crypto Hack appeared first on CoinGape.

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Filed under: News - @ January 1, 1970 12:00 am