Crypto Trader Convicted of Manipulating Mango Markets to Steal $110M in Crypto
Crypto trader Avraham Eisenberg was found guilty in U.S. federal court of manipulating the Solana decentralized finance (DeFi) trading platform Mango Markets in October 2022 to steal $110 million worth of cryptocurrency. Eisenberg, 27, faces up to 20 years in prison after being convicted of commodities fraud, commodities manipulation, and wire fraud by a federal jury in Manhattan. Mango Markets, a Solana-based decentralized exchange governed by a DAO, allows investors to lend, borrow, swap, and trade crypto with leverage. Eisenberg manipulated the price of MNGO perpetuals by selling large quantities between accounts he controlled, artificially inflating the price of MNGO by multiple orders of magnitude.
Market Manipulation Scheme and Theft
– Eisenberg used artificially pumped collateral to borrow $110 million in various cryptocurrencies.
– The theft was carried out by draining Mango’s pools.
– Eisenberg proposed returning $67 million of the stolen funds in exchange for permission to keep the remaining $43 million.
– The DAO rejected this proposition.
– Eisenberg’s defense claimed his trades were legal and complied with the protocol’s rules at the time of the heist.
Evidence and Prosecution Argument
– Evidence presented at trial included Eisenberg’s internet searches for terms related to market manipulation and fraud.
– Prosecutors argued that Eisenberg manipulated prices to deceive the system into providing him with funds.
– Eisenberg fled to Israel shortly after the exploit was discovered.
Legal Action and Arrest
– Eisenberg was arrested in Puerto Rico in December 2022 and has been in federal custody awaiting trial.
– He will remain detained until sentencing by Judge Arun Subramanian.
– Eisenberg’s actions were deemed fraudulent by the jury due to taking advantage of an ineffective price oracle.
Hot Take: Upholding Integrity in DeFi Space
Crypto traders must operate within the boundaries of the law and ethical standards to maintain the integrity of the decentralized finance space. Manipulative practices like those of Avraham Eisenberg erode trust, hinder innovation, and can lead to severe legal consequences. The prosecution’s successful conviction of Eisenberg sets a precedent for holding individuals accountable for fraudulent activities in the crypto industry. As a crypto investor, it is essential to engage in transparent and lawful trading practices that contribute to the long-term sustainability and legitimacy of decentralized finance.
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