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Another inside job at Shapeshift cost the company nearly $ 1 million

August 28, 2020

After the theft and return of $ 900,000 worth of Bitcoin (BTC), Shapeshift is now seeking damages in court against its former senior software engineer Azamat Mukhiddinov.

“The cleanup involved significant time and legal costs.” said to Cointelegraph, the legal director of Shapeshift, Veronica McGregor, and found that customer funds were safe throughout the test. “ShapeShift has no custody, so customer funds have never been at risk.” said.

Working in a senior position for Shapeshift, Mukhiddinov reportedly used his access to the exchange’s backend to steal around 90 BTC worth nearly $ 900,000 in May 2020 at the time of the robbery according to a demand Legally filed by Shapeshift on August 26, 2020.

Another inside job at Shapeshift cost the company nearly $ 1 millionAnother inside job at Shapeshift cost the company nearly $ 1 million

“Azamat began stealing bitcoins in November 2019 and continued to do so until its theft was discovered on May 21, 2020.” the document says.

Mukhiddinov joined Shapeshift on September 4, 2018 as the company’s Senior Software Engineer. Shapeshift gave Mukhiddinov access to a large part of his private and sensitive inner workings, which is called “computer infrastructure” when necessary. This included aspects such as the company’s software and servers.

Shapeshift hired Mukhiddinov to oversee the backend of his services, including strengthening his defenses against potential threats. Prior to joining the company, Mukhiddinov reportedly signed documents, one of which indicated that he should not use these important private systems.

The guidelines also specifically prohibited employees from adding apps to the system without the company’s consent. as required. However, Mukhiddinov has installed his own software inside the system that is camouflaged to work unnoticed to steal Bitcoin from Shapeshift.

The software reportedly exported about 0.5 BTC at a time owned by Mukhiddinov, Exploiting a security flaw in the Shapeshift backend.

The Shapeshift team finally noticed the missing coins and after an investigation led to Mukhiddinov, they spoke to the former engineer on May 25, 2020. “Azamat admitted installing and running the program that stole the company’s bitcoin.” displays the document.

“Ultimately, one way or another, Azamat returned all of the $ 900,000 bitcoins he stole.” Details of the legal complaint. “However, these payments do not compensate ShapeShift for the damage caused by Azamat’s actions.”

Shapeshift’s lawsuit against Mukhiddinov seeks compensation for extensive research on the matter, including time and resources invested in the company. The company reportedly had to delay the launch of its mobile app for several months. “The new ShapeShift mobile app was launched in July”, McGregor said, adding: “It’s a crypto self-custody interface with built-in trading.”

This is not the first time an internal job has been run in Shapeshift. Another incident in 2016 resulted in hundreds of thousands of dollars stolen. McGregor saw no correlation between the 2016 incident and this year’s affair.

“After the 2016 incident, we implemented important steps in terms of monitoring, operational safety and procedures,” explained. “That work helped us catch the culprit and we were able to recover all of the stolen property directly.”

Shapeshift has been active in the crypto space since 2013. It was founded by Erik Vorhees, who is listed by Cointelegraph as the 37th Most Important Person in Crypto and Blockchain.

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