NY Prosecutor Charges Cybersecurity Expert with $9 Million for Exploiting Solana-based Crypto Exchange

One of the most challenging aspects of crypto investment is the exposure to hackers and bad actors who exploit network vulnerabilities to steal assets.

Recently, a pro infosec engineer has been charged with wire theft and money laundering regarding an attack on a Solana decentralized exchange. A US Attorney tweeted the first-ever criminal case regarding a hack on a smart contract run by a DEX.

The criminal, Ahmed, returned most of the looted funds on the condition that the exchange did not contact law enforcement on the matter.

Crypto Hacker Faces Judgement for Hacking Crypto Exchange

The information hit the public on June 11, when Damian Williams, a US Attorney for the Southern District of New York, announced it in a tweet. He stated this was the first criminal suit involving a DEX-operated smart contract attack.

U.S. Attorney Damian Williams announces the first-ever criminal case involving an attack on a smart contract operated by a decentralized cryptocurrency exchange pic.twitter.com/j3JPv2L612

- US Attorney SDNY (@SDNYnews) July 11, 2023

The accused, Shakeeb Ahmed, was reported to have stolen $9 million worth of crypto assets from a Solana decentralized exchange (DEX). Williams explained that Ahmed used his skills to defraud the exchange and its customers.

According to William, Ahmed exploited this Solana-based DEX in July 2022. His tactics were exploiting a vulnerability in the DEX's smart contracts to generate massive gas fees using flash loans.

Then, he withdrew the assets via several complex transfers on the network, where he traded cryptocurrencies through different blockchains and used foreign crypto exchanges.

Though Williams refused to disclose the name of the DEX hacked last July, a recent report from Cointelegraph revealed that an anonymous hacker attacked Solana-based liquidity network Crema Finance.

This looting occurred on July 2, 2022, when the looter escaped with crypto assets worth over $9.6 million.

It's worth noting that while the attacker returned most of the looted funds, the person was permitted to have $1.6 million as his white hat bounty.

Interestingly, William's report also noted that Ahmed returned almost all the stolen funds except $1.5 million on the term that the exchange did not involve law enforcement.

Williams also stated that Ahmed's actions didn't cover his tracks or deceive law enforcement. Neither did they stop him and his law enforcement partners from tracking the money.

In July 2022, Ahmed was arrested in New York and charged with money laundering and wire fraud associated with the attack on the Solana-based decentralized exchange.

It's worth noting that Crema Finance has refused to comment on the matter for further clarification.

Crypto Lawyer Responds to the Move

In response to the move, startup, and crypto lawyer Orlando.btc noted that this move could benefit the entire decentralized finance market.

The indictment reveals that the United States Justice Department will pursue criminal charges if an individual intentionally abuses or misuses any cryptocurrency protocol.

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