Andean Medjedovic was 18 years old when he made a decision that would irrevocably alter the course of his life.<\/p>\n
In the fall of 2021, shortly after completing a master\u2019s degree at the University of Waterloo, the math prodigy and cryptocurrency trader from Hamilton had conducted a complex series of transactions designed to exploit a vulnerability in the code of a decentralized finance platform. The manoeuvre had allegedly allowed him to siphon approximately US$16.5-million in digital tokens out of two liquidity pools operated by the platform, Indexed Finance, according to a U.S. court document.<\/p>\n
Indexed Finance\u2019s leaders traced the attack back to Mr. Medjedovic, and made him an offer: Return 90 per cent of the funds, keep the rest as a so-called \u201cbug bounty\u201d \u2013 a reward for having identified an error in the code \u2013 and all would be forgiven. Mr. Medjedovic would then be free to launch his career as a white hat, or ethical, hacker.<\/p>\n
Mr. Medjedovic didn\u2019t take the deal. His social media posts hinted, without overtly stating, that he believed that because he had operated within the confines of the code, he was entitled to the funds \u2013 a controversial philosophy in the world of decentralized finance known as \u201cCode is Law.\u201d But instead of testing that argument in court, Mr. Medjedovic went into hiding. By the time authorities arrived on a quiet residential street in Hamilton to search his parents\u2019 townhouse less than two months later, Mr. Medjedovic had moved out, taking his electronic devices with him.<\/p>\n
Then, roughly two years later, he struck again, netting an even larger sum \u2013 approximately US$48.4-million \u2013 by conducting a similar exploit on another decentralized finance platform, U.S. authorities allege.<\/p>\n
Mr. Medjedovic, now 22, faces five criminal charges \u2013 including wire fraud, attempted extortion and money laundering \u2013 according to a U.S. federal court document that was unsealed<\/a> earlier this year. If convicted, he could be facing decades in prison.<\/p>\n First, authorities will have to find him.<\/p>\n The leaders of Indexed Finance didn\u2019t know Mr. Medjedovic\u2019s age when they publicly accused the teen of exploiting their platform.<\/p>\n \u201cBecause we knew he was a master\u2019s student, we believed that he was older,\u201d Laurence Day, a resident of Leeds, in Britain, later stated in an affidavit.<\/p>\n Master\u2019s students are typically in their 20s. But Mr. Medjedovic, who goes by Andy, was not a typical student.<\/p>\n Open this photo in gallery:<\/a><\/p>\n Andean Medjedovic has been indicted in the U.S. and remains a fugitive, according to U.S. authorities. This photo from his website was taken around the time he completed his master\u2019s degree in mathematics at the University of Waterloo, in 2021.Supplied<\/p>\n A slight kid with dirty blond hair, blue eyes and mischievously arched brows, Mr. Medjedovic grew up in Hamilton with his parents and his younger brother, Denean, and attended Westmount Secondary School, a highly-rated institution known for its unconventional self-directed approach to learning. In 2017, he was part of a four-student Westmount team that took the top spot in a regional coding contest.<\/p>\n The teen math prodigy wasn\u2019t the only member of his family who was comfortable with technology; his parents, Ediz and Sanja Medjedovic, repaired computers for their neighbours, according to an Ontario<\/a> court document.<\/p>\n Having completed high school at an accelerated pace, Mr. Medjedovic was just shy of his 15th birthday when he started his undergraduate studies in pure mathematics at the University of Waterloo. He finished what is typically a four-year bachelor\u2019s program in a brisk three years, then breezed through a master\u2019s degree in a single year.<\/p>\n On his CV, later filed in Ontario Superior Court, he listed his Putnam Competition score as 39 \u2013 a result in an annual North American undergraduate math contest that, if accurate, would render him a \u201cmath genius,\u201d according to Indexed Finance\u2019s U.S. lawyer, Jason Gottlieb. (The competition is known for its difficulty; while the maximum score is 120, the median score is often in the low single digits.) Mr. Medjedovic received scholarships and came close to winning a cash prize in a university math contest called the Bernoulli Trials. He also listed several rather exalted hobbies on his CV: meditation, playing blindfolded chess and crypto<\/a> trading.<\/p>\n In the summer of 2021, as he was wrapping up his studies, Mr. Medjedovic successfully competed in two hacking contests run by an organization called Code Arena, according to court documents. During the competitions, participants hunt for weaknesses in the code governing decentralized autonomous organizations, or DAOs, which are structures deliberately designed without a central authority that utilize a digital ledger known as a blockchain.<\/p>\n Then, on Oct. 14, Mr. Medjedovic allegedly unleashed his skills on Indexed Finance, a platform that allows users to trade multiple virtual currencies through a single token, similar to a mutual fund with many stocks in it.<\/p>\n Mr. Medjedovic took out what\u2019s known in decentralized finance as a flash loan \u2013 an uncollateralized loan in which assets are borrowed and repaid within the same series of transactions. Then, using approximately US$157-million in borrowed assets, he allegedly executed a complex sequence of trades that manipulated token prices in two of Indexed Finance\u2019s liquidity pools, allowing him to transfer US$16.5-million of digital tokens to his own wallet, according to a U.S.<\/a> court filing.<\/p>\n None of the allegations have been proven in court. Mr. Medjedovic did not provide a response to the allegations against him when reached online by The Globe and Mail.<\/p>\n In the days following the attack, Indexed Finance, its lawyer and even one of the founders of the hacking contest implored Mr. Medjedovic to return the tokens.<\/p>\n Mr. Gottlieb praised Mr. Medjedovic on social media as a \u201cyoung, bright guy\u201d with a \u201cbright future.\u201d But just because he was good at math didn\u2019t mean that he understood the law, Mr. Gottlieb said. In an e-mail sent to Mr. Medjedovic\u2019s personal address, he cautioned the teen that the stolen tokens were easy to trace and would be difficult to access. \u201cDon\u2019t screw up your whole future over money you can\u2019t ever touch anyway,\u201d Mr. Gottlieb wrote.<\/p>\n But Mr. Medjedovic wouldn\u2019t budge. He didn\u2019t deny that he was behind the exploit \u2013 in fact, he took credit for it on the social media platform X \u2013 but he implied that his actions were lawful.<\/p>\n \u201cIf Indexed wants to insinuate that I did something wrong and resort to name-calling, LOL,\u201d he wrote, later adding: \u201cYou were out-traded. There is nothing you can do about that.\u201d<\/p>\n Open this photo in gallery:<\/a><\/p>\n Mr. Medjedovic was not yet 15 when he started his bachelors degree in pure mathematics at the University of Waterloo, which he completed in three years. He then breezed through a master\u2019s degree in a single year.Fred Lum\/The Globe and Mail<\/p>\n The Code is Law philosophy is based on the straightforward premise that if the code governing a platform permits a user to do something, then the action is legal. The analogy that is often used is that of algorithmic high-frequency trading. If one Wall Street hedge fund is able to profit by exploiting a pattern in another firm\u2019s trades, the loser doesn\u2019t have any legal recourse; that\u2019s simply the risk that comes with playing the game.<\/p>\n Similarly, proponents of Code is Law argue that because the code governing decentralized finance platforms is open source, and because users choose to use the platform, those users are voluntarily taking on the risk that someone may exploit whatever flaws or loopholes exist within the code.<\/p>\n Not everyone agrees. \u201cCode is not law. Law is law,\u201d Mr. Gottlieb wrote in a lengthy thread to Mr. Medjedovic on X in late October, 2021. \u201cAnd what you did was not a \u2018clever trade.\u2019 It was market manipulation. It\u2019s illegal. And people go to prison for it.\u201d<\/p>\n