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NY Attorney reveals First Criminal Case involving a DEX



Damian Williams, a U.S. Attorney from the Southern District of New York, recently made an announcement regarding the first-ever case of fraud on a decentralized cryptocurrency exchange. 

According to Damian, Shakeeb Ahmed, a Senior Security Engineer at an international technology company, utilized his expertise to defraud users and steal $9 million worth of cryptocurrency.

In addition, Damian stated, “We also allege that he has been laundering the stolen funds through a series of complex transfers on the blockchain,” effectively moving the funds through various exchanges overseas. 

Despite going unnoticed by these platforms and law enforcement agencies, the attorney emphasized that his office was able to successfully “follow the money.”

In the crypto industry, exchanges play a crucial role as platforms for buying, selling, and trading cryptocurrencies. They function as digital marketplaces where users can exchange one cryptocurrency for another or convert cryptocurrencies into traditional fiat currencies like the US dollar or Euro.

Crypto exchanges come in different forms, namely centralized exchanges (CEX) and decentralized exchanges (DEX). Centralized exchanges are operated by a central authority or company that acts as an intermediary, holding users’ funds and executing trades on their behalf. 

These exchanges often offer user-friendly interfaces, advanced trading features, and high liquidity. However, they require users to deposit their funds into the exchange’s wallets, which may pose security and custodial risks.

On the other hand, decentralized exchanges operate on blockchain technology and eliminate the need for a central authority or intermediary. These exchanges enable users to directly trade cryptocurrencies using smart contracts and atomic swaps. 

By doing so, DEX offers enhanced privacy and control over funds, as users maintain ownership of their assets throughout the entire trading process.

However, due to the absence of a central authority in decentralized exchanges, it becomes more challenging to prevent fraudulent activities. This is because every transaction is fully controlled by smart contracts, eliminating the need for centralized control.

In addition, Damian commended the Southern District of New York for its proactive approach in apprehending and prosecuting criminals who employ modern technologies to perpetrate traditional fraud. 

He emphasized that these charges demonstrate a firm dedication to combating fraud, irrespective of whether it takes place within conventional financial institutions or decentralized cryptocurrency exchanges.

According to Damian, “It doesn’t matter whether someone steals money from a bank or a decentralized crypto exchange; it’s all fraud, plain and simple. We are watching and are determined to follow the digital fingerprints to bring fraudsters to justice.” 

Read also; 
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