A 22-year-old Canadian man, Andean Medjedovic, is facing serious criminal charges after allegedly exploiting vulnerabilities in decentralized finance (DeFi) protocols, causing a significant financial loss to investors.
The indictment, which was unsealed today in federal court in New York, outlines a five-count criminal case, accusing Medjedovic of fraudulently obtaining approximately $65 million from investors by taking advantage of the smart contracts of two well-known DeFi platforms.
Deceptive Trading and False Calculations
Court documents reveal that between 2021 and 2023, Medjedovic used his knowledge of vulnerabilities in the automated smart contracts of KyberSwap and Indexed Finance to manipulate the system.
Through deceptive trading strategies, he borrowed hundreds of millions of dollars in digital tokens.
These trades caused the smart contracts to incorrectly calculate important variables, which allowed Medjedovic to withdraw millions of dollars in investor funds at artificially inflated prices.
As a result, the investments were rendered almost entirely worthless.
Money Laundering and Extortion Attempts
Medjedovic allegedly didn’t stop with fraudulent trades.
He’s also accused of laundering the proceeds of his scams by hiding the origins of the funds through a series of transactions.
These included swap transactions, “bridging transactions,” and the use of a digital asset mixer.
Additionally, he attempted to further conceal his actions by opening accounts with digital asset exchanges under false identities.
Around November 2023, after completing the KyberSwap exploit, Medjedovic allegedly attempted to extort the victims involved by proposing a fake settlement.
In his demand, he sought complete control of the KyberSwap protocol and its governing decentralized autonomous organization, in exchange for returning only half of the stolen assets.
Charges and Potential Penalties
Medjedovic now faces multiple criminal charges: wire fraud, unauthorized damage to a protected computer, attempted extortion, money laundering conspiracy, and money laundering.
The charges carry significant penalties, including a maximum of 10 years in prison for the computer damage charge and up to 20 years for each of the other charges, should he be convicted.
The final sentencing will be determined by a federal district court judge, who will consider guidelines and other factors.
Investigation and Prosecution Team
The case has drawn attention from multiple law enforcement agencies.
The investigation is being led by the IRS Criminal Investigation (IRS-CI), Homeland Security Investigations (HSI) New York, and the FBI New York Field Office.
They were assisted by U.S. Customs and Border Protection’s New York Field Office and the Justice Department’s Office of International Affairs.
International assistance came from the Netherlands’ Public Prosecution Service and the Cybercrime Unit of the Dutch National Police.
The case is being prosecuted by Trial Attorney Tian Huang of the Criminal Division’s Fraud Section, who is part of the National Cryptocurrency Enforcement Team (NCET), along with Assistant U.S. Attorneys Nicholas Axelrod and Andrew Reich for the Eastern District of New York.
The U.S. Securities and Exchange Commission (SEC) also provided significant assistance through Enforcement Attorney Daphna A. Waxman.
Allegations and Legal Process
It’s important to remember that the indictment represents allegations, not proof of guilt.
Medjedovic, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt in court.
The legal process will continue to unfold as authorities work to hold him accountable for the charges brought against him.
This article was published on TDPel Media. Thanks for reading!
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