- Hacker exploited KyberSwap and Indexed Finance and stole $65M using smart contract flaws.
- Medjedovic laundered stolen crypto via mixers, fake KYC accounts, and bridging protocols.
- Authorities say Medjedovic used borrowed funds to manipulate DeFi liquidity pool prices.
The U.S. Department of Justice charged a Canadian national for stealing for stealing $65 million worth of cryptocurrency from two decentralized finance (DeFi) protocols, KyberSwap and Indexed Finance. Andean Medjedovic, a Math graduate from the University of Waterloo, exploited vulnerabilities by manipulating smart contracts to carry out deceptive trading and stole $65 million from DeFi platforms.
The fraudulent actions of Medjedovic resulted in major loss of investment funds in both DeFi platforms. The accused used cryptocurrency mixers along with other payment methods to disguise the money’s source, which were of the investors. Such cybercrimes within emerging financial technologies garner attention from government officials.
Exploiting Vulnerabilities in KyberSwap
Medjedovic’s exploit of KyberSwap in November 2023 is one of the most significant thefts. Through borrowed cryptocurrency assets, he manipulated prices in KyberSwap liquidity pools and managed to deceive KyberSwap smart contracts through complex trading schemes, which enabled him to extract $48.8 million from 77 liquidity pools across six blockchain networks.
The hacker made an extortion attempt by demanding management control over KyberSwap while offering to return stolen funds equivalent to half of the amount taken. Further, he employed “bridge” protocols and cryptocurrency mixers to cover up his illegal activities. After the platform rejected his manipulations, a probe started on him, although Medjedovic used dishonest tactics.
Following freezing bridge protocol transactions by one of his protocols, Medjedovic agreed to pay an undercover law enforcement agent, who posed as a software developer $80,000 in exchange for enabling the release of around $500,000 in stolen cryptocurrencies.
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Indexed Finance Exploit and Money Laundering
In October 2021, Medjedovic attacked the Indexed Finance platform using a similar method. He controlled the smart contract functions through significant cryptocurrency borrowing during the “re-indexing” phase. Through this deception, he controlled prices artificially and stole $16.5 million worth of cryptocurrency from platform liquidity pools.
Medjedovic faces criminal charges for partnering with others who created false identity cryptocurrency exchanges to wash the stolen funds. Through a program named “moneyMovementSystem,” Medjedovic designed an approach to transfer his stolen cryptocurrency funds past regulatory controls that operated through Know Your Customer (KYC) processes. The sophistication of criminals targeting cryptocurrency shows an increase in cybercriminals operating within the cryptocurrency sector.
