Alex Hoffman, the head of ecosystem at Superposition Finance, recently revealed that he was an anonymous co-founder of the decentralized finance (DeFi) yield protocol Nirvana Finance, which fell victim to a $3.5 million flash loan exploit two years ago.
In an exclusive interview with Cointelegraph, Hoffman shared the story of the “worst day” of his life, when he woke up one morning to discover that all the funds in Nirvana Finance had disappeared just as they were about to begin an audit on July 28, 2022.
The search for the Nirvana Finance hacker lasted 17 months, culminating in the arrest of software engineer Shakeeb Ahmed in December 2023. Ahmed was sentenced to three years in prison after admitting to hacking Nirvana Finance.
Hoffman explained that the investigation took so long due to the sophistication of Ahmed’s exploit, which led investigators to numerous dead ends. A breakthrough came when a chance Telegram message from a United States Department of Homeland Security officer provided a solid lead on the exploit, ultimately linking it to Ahmed.
Following months of collaboration with law enforcement agencies and investigators, Hoffman was able to explain the infrastructure of the protocol to authorities, leading to the tracing of the exploit back to Ahmed.
Despite facing death threats and accusations of rug-pulling from victims during the 17-month investigation, Hoffman remained committed to clearing his name and explaining that he was not responsible for the exploit.
Looking back on Nirvana Finance’s rapid rise and fall, Hoffman expressed surprise at the protocol’s unexpected success, which attracted significant attention and investment within its first week of launch.
Today, Nirvana Finance remains insolvent, but plans for its recovery are still underway. Investors are advised to exercise caution when trading Nirvana (NIRV) tokens, according to the protocol’s website.
In conclusion, the story of Nirvana Finance serves as a cautionary tale in the world of DeFi, highlighting the importance of security audits and transparency in protecting investors and preventing exploitation in the crypto space.