The U.S. Department of Justice (DOJ) recently unsealed an indictment charging Shakeeb Ahmed, a senior security engineer at an international technology firm, with wire fraud and money laundering. The charges stem from an attack on a decentralized cryptocurrency exchange (hereafter referred to as the "Crypto Exchange") that resulted in approximately $9 million in stolen cryptocurrency. Crypto Criminal Defense Blog 


According to the indictment, Ahmed exploited a vulnerability in the Crypto Exchange's smart contract, inserted fraudulent pricing data, and generated inflated fees he did not earn. Post-theft, Ahmed attempted to negotiate with the Crypto Exchange, offering to return all stolen funds except for $1.5 million if the Crypto Exchange refrained from reporting the attack to law enforcement.

The U.S. Attorney for the Southern District of New York, Damian Williams, stated that this is the second case in a week to highlight fraud within the cryptocurrency and digital asset landscape. Ahmed's actions involved a series of complex transactions and transfers on various blockchains, including overseas exchanges, to launder the stolen funds. However, Williams highlighted that these moves were not enough to deter or fool law enforcement.

The indictment also detailed Ahmed's attempts to research his own criminal liability, possible legal defenses, and law enforcement's capability to investigate such attacks. He also sought information on how to flee the U.S. and avoid extradition, demonstrating the possibility of foreseeing his impending charges.

After the attack, AHMED searched online for information about the attack, his own criminal liability, criminal defense attorneys with expertise in similar cases, law enforcement’s ability to successfully investigate the attack, and fleeing the United States to avoid criminal charges.  For example, approximately two days after the attack, AHMED conducted an internet search for the term “defi hack,” read several news articles about the hack of the Crypto Exchange, and visited several pages on the Crypto Exchange’s website.  As another example, AHMED conducted internet searches or visited websites related to the charges in the indictment, including by searching for the term “wire fraud” and for the term “evidence laundering.”  Finally, AHMED also conducted internet searches or visited websites related to his ability to flee the United States, avoid extradition, and keep his stolen cryptocurrency: he searched for the terms “can I cross border with crypto,” “how to stop federal government from seizing assets,” and “buying citizenship”; and he visited a website titled “16 Countries Where Your Investments Can Buy Citizenship . . .” DOJ Press Release 

The charges against Ahmed include wire fraud and money laundering, each carrying a maximum sentence of 20 years in prison. As per usual legal procedures, these are only potential sentences, and the actual sentence will be determined by a judge. 

The case is an evident example of the regulatory and legal challenges facing the cryptocurrency world and emphasizes the need for continued vigilance and cooperation among exchanges, law enforcement, and regulatory agencies to prevent and prosecute such frauds.

Nothing in this post should be considered legal advice or the creation of an attorney-client relationship. This blog is strictly for informational purposes only.