Canadian National Charged With Exploiting DeFi Protocols

According to Cointelegraph, U.S. prosecutors have charged a Canadian national, Andean Medjedovic, with exploiting decentralized finance (DeFi) protocols, KyberSwap and Indexed Finance, resulting in the theft of approximately $65 million. The Justice Department unsealed an indictment on February 3 in a Brooklyn federal court, accusing Medjedovic of hacking, attempted extortion, money laundering, and wire fraud. The Brooklyn U.S. Attorney’s office stated that Medjedovic is currently at large. Prosecutors allege that Medjedovic executed deceptive trades to steal around $16.5 million from liquidity pools on Indexed Finance in October 2021. He reportedly carried out a similar attack on KyberSwap, exploiting it for approximately $48.8 million in November 2023. According to the indictment, Medjedovic borrowed hundreds of millions of dollars in digital tokens to engage in deceptive trading, causing the protocols’ smart contracts to miscalculate key variables. This manipulation allowed him to withdraw millions of dollars of investor funds at artificial prices, rendering the victims’ investments essentially worthless. Following the alleged exploitation of KyberSwap, prosecutors claim Medjedovic attempted to extort the victims through a fraudulent settlement proposal. He allegedly sent a series of on-chain messages threatening to delay negotiations for returning the funds and demanded control of the protocol in exchange for returning 50% of the fraudulently obtained digital assets. The indictment further alleges that Medjedovic conspired with a relative to launder the stolen crypto through a mixer and various blockchain bridges, aiming to cash out on exchanges and into bank accounts created with fake information. Prosecutors also noted 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 release the crypto. Information regarding Medjedovic’s legal representation was not available, and he could not be reached for comment.