DEX hacker sentenced to three years in prison after stealing $12 million worth of cryptocurrency

On Friday, the US Department of Justice (DoJ) announced that Shakeeb Ahmed, who stole more than $12 million worth of cryptocurrencies, was sentenced to three years in prison by US District Judge Victor Marrero. Within a month, Shakeeb Ahmed stole the funds from two separate decentralized exchanges, Nirvana Finance and another.

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Crypto hacker receives prison sentence

In the first-ever conviction for a smart contract hack, US District Judge Victor Marrero sentenced Ahmed, a former security engineer for an international tech company.

The DoJ's press release revealed Ahmed leveraged skills in reverse engineering smart contracts and blockchain audits to exploit vulnerabilities in an unnamed crypto exchange and Nirvana Finance.

Ahmed first targeted the unnamed exchange around July 2 and 3, 2022, by leveraging a loophole in its pricing data to generate and withdraw cryptocurrency fees worth about $9 million. "After he stole the fees, AHMED had communications with the Crypto Exchange in which he agreed to return all of the stolen funds except for $1.5 million if the Crypto Exchange agreed not to refer the attack to law enforcement," said the DoJ.

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A few weeks later, he exploited a smart contract vulnerability in Solana-based Nirvana Finance to conduct a flash loan attack that saw him gain $3.6 million. Nirvana offered him a bug bounty of $600,000 to return the funds, but he refused, requesting $1.4 million instead.

Ahmed kept all the stolen funds as he didn't reach an agreement with Nirvana. "The $3.6 million AHMED stole represented approximately all the funds possessed by Nirvana, which as a result shut down shortly after AHMED's attack," the DoJ stated.

He later used a combination of bridging the assets from Solana to Ethereum, privacy coin Monero and cryptocurrency mixers to hide the history of the stolen funds.

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Ahmed was first arrested in July 2023 and later pled guilty in December before being sentenced to three years on Friday. Judge Victor Marrero also ordered that Ahmed forfeit $12.3 million and pay restitution of $5 million to Nirvana and the unnamed crypto exchange.

"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," said US Attorney Damian Williams.

In other news, Sam Bankman-Fried, convicted founder of defunct exchange, FTX has appealed his 25 years prison sentence.