US prosecutors have charged a Canadian national with exploiting the decentralized finance (DeFi) protocols KyberSwap and Indexed Finance, accusing him of stealing around $65 million and laundering the proceeds.
The Justice Department on Feb. 3 unsealed an indictment in a Brooklyn federal court against Andean Medjedovic, charging him with hacking, attempted extortion, money laundering and wire fraud. The Brooklyn US Attorney’s office said Medjedovic is currently at large.
Prosecutors allege Medjedovic made “deceptive trades” to steal around $16.5 million from liquidity pools on Indexed Finance in October 2021 and later carried out a similar attack to exploit KyberSwap for around $48.8 million in November 2023.
“Medjedovic borrowed hundreds of millions of dollars in digital tokens, which he used to engage in deceptive trading that he knew would cause the protocols’ smart contracts to falsely calculate key variables,” prosecutors said.
“Through his deceptive trades, Medjedovic was able to, and did, withdraw millions of dollars of investor funds from the protocols at artificial prices, rendering the victims’ investments essentially worthless,” the indictment said.
An excerpt from the indictment claims Medjedovic discussed the legality of his alleged actions. Source: US Department of Justice
After allegedly exploiting KyberSwap, prosecutors said he “attempted to extort the victims of the KyberSwap exploit through a sham settlement proposal.”
They said Medjedovic sent a series of onchain messages threatening to delay negotiations around returning funds and later demanded control of the protocol “in exchange for returning 50% of the digital assets that he fraudulently obtained through this scheme.”
Related: CFPB proposes crypto firms refund users for funds lost to hacks
The indictment alleged that Medjedovic then conspired with a relative to attempt to launder crypto stolen from KyberSwap and Indexed Finance through a crypto mixer and various blockchain bridges with the aim of cashing out on exchanges and into bank accounts created using fake information.
Prosecutors said that after an unnamed bridge protocol froze some of the funds, Medjedovic allegedly paid around $85,000 to an undercover law enforcement agent posing as a software developer to free the crypto.
Information for Medjedovic’s lawyers was not available. Medjedovic could not be reached for comment.
Magazine: Legal issues surround the FBI’s creation of fake crypto tokens