U.S. charges Solana attacker with money laundering in first enforcement action of its kind

The U.S. Attorney for the Southern District of New York (SDNY) announced in a July 11 press release that it is pressing charges against Shakeeb Ahmed, a senior security engineer at an unidentified company, for money laundering in connection with the exploit of an unnamed Solana-based protocol in July 2022. This marks the first time the United States government has brought charges in connection with a smart contract attack on a decentralized exchange.

Ahmed allegedly exploited the smart contracts of a Solana-based exchange in order to manipulate the platform’s price data and generate $9 million in inflated fees. Ahmed supposedly made use of flash loans during the attack and used his skills in reverse engineering smart contracts and blockchain audits as well.

After withdrawing the stolen funds as cryptocurrency, Ahmed allegedly attempted to negotiate with the crypto exchange. He offered to return all but $1.5 million of the stolen funds so long as the exchange refrained from reporting the incident to law enforcement.

Officials noted that this marks the first criminal case involving an attack on a decentralized exchange’s smart contracts.

Though the SDNY did not identify the targeted exchange, the date, amount stolen, and mention of Solana closely match a 2022 attack against Crema Finance.

Defendant failed to cover his tracks

Officials said that Ahmed resorted to various methods in order to launder the stolen fees and mask his transactions. He supposedly carried out token swaps, bridged transactions between Solana (SOL) and Ethereum (ETH), converted funds to the privacy coin Monero (XMR), and made transactions on overseas cryptocurrency exchanges.

U.S. Attorney Damian Williams said that Ahmed was unable to conceal his activity. Williams said that none of the accused’s actions “covered [his] tracks or fooled law enforcement” and said that authorities were able to follow the movement of money.

Ahmed now faces a potential maximum sentence of 20 years in prison for each of the charges of wire fraud and money laundering. As with all criminal cases, Ahmed is presumed innocent until proven guilty in a court of law.

On July 10, the SDNY charged another individual in a spoofing scheme that resulted in the theft of $450,000 of crypto and NFTs via OpenSea. Officials acknowledged that case as another example of crypto fraud during the latest announcement.

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