Canadian Hacker Indicted for $65M DeFi Exploit

By: Isha Das

A significant development has emerged in the cryptocurrency sector as a Canadian individual, Andean Medjedovic, faces a five-count criminal indictment related to exploiting vulnerabilities in decentralized finance (DeFi) platforms KyberSwap and Indexed Finance, leading to thefts amounting to $65 million. This comes after a federal court in New York unsealed the indictment on February 3. Medjedovic remains at large, with legal authorities continuing efforts for his apprehension.

The charges against Medjedovic include wire fraud, unauthorized damage to a protected computer, attempted Hobbs Act extortion, and money laundering conspiracy, as outlined by the US Department of Justice. These serious accusations reflect the methods he allegedly employed, such as manipulating automated smart contracts to orchestrate his exploits. The use of sophisticated schemes to borrow and withdraw tokens at contrived prices reportedly left investor holdings significantly devalued, showcasing the potential risks within DeFi systems.

Moreover, authorities have detailed how Medjedovic engaged in extensive money laundering operations, employing swaps, bridging transactions, and crypto mixers to obfuscate his financial trails. Additionally, by conspiring with others, he opened multiple accounts on cryptocurrency exchanges using false identities. This strategy was reportedly designed to further mask the illicit origins of the stolen assets.

The timeline of these exploits traces back to notable incidents involving the KyberSwap and Indexed Finance platforms. In 2021, Medjedovic allegedly targeted Indexed Finance during a rebalancing phase, successfully bypassing security measures to pilfer $16 million. Later, in November 2023, he expanded his operations to KyberSwap, extracting around $49 million and subsequently attempting extortion by proposing unwarranted control of the platform's operations in exchange for partial reimbursement of the embezzled funds.

The aftermath of these attacks has compelled KyberSwap to initiate compensation procedures, restoring financial losses to affected users. Meanwhile, both KyberSwap and Indexed Finance are in the process of rebuilding their platforms’ integrity and value after these security breaches. The overarching scenario presents a renewed call for stringent security protocols and monitoring within DeFi space, emphasizing the necessity for vigilant oversight in an industry prone to sophisticated cyber threats.