In a landmark legal action, former Amazon engineer Shakeeb Ahmed was sentenced to three years in prison for orchestrating hacks on two DeFi cryptocurrency exchanges, resulting in over $12 million theft.
US District Judge Victor Marrero handed down the sentence, marking a significant milestone in crypto-related law enforcement.
DeFi Hacker Sentenced to 3 Years in Prison
Shakeeb Ahmed utilized his extensive knowledge in reverse engineering and blockchain audits to manipulate smart contracts on the exchanges. US Attorney Damian Williams states this case represents the first-ever conviction for hacking a smart contract.
“No matter how novel or sophisticated the hack, this Office and our law enforcement partners are committed to following the money and bringing hackers to justice. And as today’s sentence shows, time in prison — and forfeiture of all the stolen crypto — is the inevitable consequence of such destructive hacks,” Williams emphasized.
On July 2 and 3, 2022, Ahmed targeted the first exchange by injecting fake pricing data, generating $9 million in inflated fees, which he then illicitly withdrew. In a subsequent communication with the exchange, Ahmed agreed to return the stolen funds except for $1.5 million, provided the exchange did not report the attack to law enforcement.
A few weeks later, on July 28, Ahmed exploited a vulnerability in Nirvana Finance’s smart contracts. This second attack drained Nirvana of approximately $3.6 million, nearly all its funds, forcing the platform to shut down. Ahmed declined Nirvana’s substantial bug bounty offer, opting to keep the stolen assets.
Read more: Identifying & Exploring Risk on DeFi Lending Protocols
Ahmed engaged in sophisticated laundering techniques to obscure the origins of the stolen funds. These included swapping tokens across blockchains, converting assets into the untraceable crypto Monero, and utilizing overseas exchanges and cryptocurrency mixers.
In addition to prison time, the court has ordered Ahmed to forfeit around $12.3 million in stolen assets. He must also pay restitution exceeding $5 million to the affected exchanges. He will also undergo three years of supervised release post-incarceration.
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