A Canadian man, Andean Medjedovic, 22, has been charged with exploiting vulnerabilities in decentralized finance (DeFi) protocols to fraudulently obtain approximately $65 million from investors, according to a five-count criminal indictment unsealed in federal court in New York today.
From 2021 to 2023, Medjedovic allegedly took advantage of weaknesses in the smart contracts of KyberSwap and Indexed Finance protocols, which are integral to DeFi platforms. Through deceptive trading practices, Medjedovic borrowed hundreds of millions of dollars in digital tokens, knowing his trades would distort key data calculated by the protocols’ smart contracts. This manipulation allowed him to withdraw millions of dollars at artificially inflated prices, effectively rendering investors’ funds worthless.
Medjedovic also faces charges for money laundering after allegedly using a series of complex transactions to hide the origin and ownership of the fraudulent funds. This included using digital asset mixers, “bridging transactions,” and false identities to open accounts on crypto exchanges.
In an attempted extortion scheme, Medjedovic allegedly demanded full control of the KyberSwap protocol and its decentralized autonomous organization (DAO) in exchange for returning half of the stolen assets. He made this proposal after executing the KyberSwap exploit in late 2023.
Medjedovic has been charged with wire fraud, unauthorized damage to a protected computer, attempted extortion, and money laundering conspiracy, among other offenses. If convicted, he faces up to 20 years in prison on each of the charges, with the possibility of an additional 10 years for the unauthorized computer damage count.
The case is being investigated by the IRS Criminal Investigation, Homeland Security Investigations, and the FBI’s New York Field Office. Additional support was provided by U.S. Customs and Border Protection and international law enforcement, including the Netherlands’ Public Prosecution Service and the Dutch National Police.
The indictment follows a broader crackdown on fraud within the cryptocurrency space, as federal authorities work to address growing concerns about illegal activities in the fast-evolving digital finance sector.
