Shakeeb Ahmed, a former security engineer, has been arrested for defrauding a decentralized crypto exchange and stealing over $9 million.
A digital currency exchange, also known as a cryptocurrency exchange (DCE), is a company that enables individuals to trade cryptocurrencies or digital currencies for other assets, such as traditional fiat money or other digital currencies.
This marks the first criminal case involving a smart contract operated by a decentralized exchange.
Vulnerability in Crypto Exchange’s Smart Contracts
In July 2022, Ahmed took advantage of a vulnerability in smart contracts and inserted fake pricing data, resulting in fraudulent gains of approximately $9 million. He also utilized “flash loans” to defraud the crypto exchange.
Utilizing his specialized skills as a senior security engineer, he forcefully carried out the attack by reverse engineering smart contracts and conducting rigorous blockchain audits.
After committing theft, he made the decision to return all of the stolen money except for $1.5 million to the Crypto Exchange, on the condition that they did not report the incident to law enforcement.
Ahmed concealed the source and ownership of the millions he stole from the Crypto Exchange by laundering them through fees, including (i) conducting token-swap transactions, (ii) “bridging” fraud proceeds from the Solana blockchain over to the Ethereum blockchain, (iii) exchanging fraud proceeds into Moner ..
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