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After orchestrating a series of hacks on two decentralized cryptocurrency exchanges (DEXs) that stole more than $12 million worth of crypto, former security engineer Shakeeb Ahmed was <a href="https://www.justice.gov/usao-sdny/pr/former-security-engineer-sentenced-three-years-prison-hacking-two-decentralized" target="_blank" rel="noopener nofollow">sentenced</a> today to three years in prison, this is&nbsp;the first-ever smart contract hacking conviction in the US.&nbsp; 
Ahmed was also ordered to forfeit the stolen crypto and pay restitution to the affected exchanges. 
<h2 id="engineer-exploits-crypto-vulnerabilities-in-12-million-hacks">Engineer Exploits Crypto Vulnerabilities In $12 Million Hacks</h2> 
According to charging documents and court filings, Ahmed conducted two separate attacks on<a href="https://bitcoinist.com/digitex-futures-exchange-ceo-faces-criminal-charges/" target="_blank" rel="noopener "> decentralized exchanges</a>. In the first incident, which took place on July 2 and 3, 2022, he manipulated fake pricing data to generate approximately $9 million in inflated fees. Subsequently, Ahmed withdrew these fees in the form of cryptocurrency.&nbsp; 
Following the theft, Ahmed communicated with the exchange, offering to return the stolen funds, except $1.5 million, if the exchange did not involve law enforcement. 
Shortly after, on July 28, 2022, Ahmed targeted another decentralized exchange called Nirvana Finance. Exploiting a vulnerability in Nirvana’s <a href="https://bitcoinist.com/former-binance-ceo-faces-delay-in-sentencing/" target="_blank" rel="noopener ">smart contracts</a>, he purchased crypto assets at a lower price than intended and promptly resold them back to Nirvana at a higher price.&nbsp; 
Despite Nirvana offering a substantial “bug bounty” of up to $600,000 for the return of the <a href="https://bitcoinist.com/cybercriminals-make-off-with-81-million-orbit-hack/" target="_blank" rel="noopener ">stolen funds</a>, Ahmed demanded $1.4 million. This led to the collapse of the exchange, which had lost all its possessed funds, approximately $3.6 million, due to Ahmed’s attack. 
<h2 id="from-security-expert-to-cybercriminal">From Security Expert To Cybercriminal</h2> 
The investigation revealed that Ahmed used “advanced money laundering techniques” to conceal the source and ownership of the stolen funds.&nbsp; 
These included token swap transactions, transferring fraud proceeds from the Solana (SOL) <a href="https://bitcoinist.com/ftx-bankman-fried-accused-of-criminal-by-ellison/" target="_blank" rel="noopener ">blockchain </a>to the Ethereum (ETH) blockchain through “bridging,” converting the funds to Monero, and then using overseas exchanges and cryptocurrency mixers such as Samourai Whirlpool. 
Ahmed, a US citizen, held a senior security engineer position at an international technology company at the time of the attacks. His resume showcased expertise in reverse engineering smart contracts and conducting <a href="https://bitcoinist.com/sam-bankman-fried-guilty-on-7-criminal-counts/" target="_blank" rel="noopener ">blockchain audits</a>, skills that he utilized to execute the hacks.&nbsp; 
In addition to the three-year prison term, Ahmed was sentenced to three years of supervised release. He must forfeit approximately $12.3 million, including a significant amount of cryptocurrency, and pay the affected exchanges over $5 million in restitution. Commenting on Shakeeb Ahmed’s sentencing, US Attorney Damian Williams said&nbsp; 
<blockquote>
 Today, Shakeeb Ahmed was sentenced to prison in the first-ever conviction for the hack of a smart contract and ordered to forfeit all of the stolen crypto.&nbsp; 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.&nbsp; And as today’s sentence shows, time in prison — and forfeiture of all the stolen crypto — is the inevitable consequence of such destructive hacks.
</blockquote> 
<img loading="lazy" decoding="async" class="size-medium" src="https://www.tradingview.com/x/V3V7ubR6/" alt="Crypto" width="1815" height="858"> 
Featured image from Shutterstock, chart from TradingView.com

First-Ever Conviction For Crypto Smart Contract Hacking: Nirvana Exploiter Sentenced To 3 Years

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