Shakeeb Ahmed, a security engineer, has been arrested by the U.S. Department of Justice (DOJ) on charges of wire fraud and money laundering. The arrest follows an investigation into Ahmed’s alleged theft of $9 million worth of cryptocurrency from an undisclosed decentralized cryptocurrency exchange (DEX). According to the DOJ, Ahmed exploited a vulnerability in the exchange’s smart contracts and used fake pricing data to generate and withdraw inflated fees.
Sophisticated attack on decentralized cryptocurrency exchange
The DOJ revealed that Ahmed, a senior security engineer at an international technology company, orchestrated a complex attack on a decentralized cryptocurrency exchange operating on the Solana blockchain. In July 2022, Ahmed reportedly took advantage of a vulnerability within one of the exchange’s smart contracts, manipulating it to generate approximately $9 million worth of inflated fees. Ahmed then withdrew these fees in the form of cryptocurrency, defrauding the exchange and its users.
To conceal the source and ownership of the stolen funds, Ahmed engaged in various money laundering techniques. The indictment alleges that he conducted token-swap transactions, transferred fraud proceeds from the Solana blockchain to the Ethereum blockchain, exchanged the funds into Monero (a difficult-to-trace cryptocurrency), and utilized overseas cryptocurrency exchanges.
Following the attack, Ahmed allegedly engaged in communication with the exchange, offering to return all of the stolen funds, except for $1.5 million, on the condition that the exchange refrained from involving law enforcement authorities. However, the DOJ’s investigation indicates that Ahmed’s attempts to cover his tracks were unsuccessful.
Potential consequences
Shakeeb Ahmed, 34, now faces wire fraud and money laundering charges, with each charge carrying a maximum sentence of 20 years in prison. However, the case is being prosecuted by the U.S. Attorney’s Office for the Southern District of New York, with assistance from the Southern District of California. The DOJ commended the collaboration between Homeland Security Investigations (HSI) and the Internal Revenue Service – Criminal Investigation (IRS-CI) in dismantling sophisticated fraud schemes and holding individuals accountable for their actions.
