Mango Markets exploiter arrested for fraud

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The crypto trader behind decentralized exchange Mango Markets’ $110 million exploit has been arrested in Puerto Rico and charged with market manipulation and fraud.

According to a previously sealed complaint filed with the Southern District of New York made public on December 27, the Federal Bureau of Investigation (FBI) has nabbed Avraham Eisenberg with a count of commodity fraud and a count of commodity manipulation. in connection with his feat of Mango Markets.

Eisenberg’s October 11 exploit on Mango Markets worked by manipulating the value of the native token of MNGO platforms, artificially inflating its price against USD Coin (USDC).

Eisenberg and his team then took out massive loans against his inflated collateral, which drained Mangos treasury of around $110 million of various cryptocurrencies.

A day later, on October 12, Mango entered into negotiations with Eisenberg for the return of the funds.

On October 15, Eisenberg publicly confessed to operating the crypto exchange, stating at the time that he was involved with a team that applied a highly profitable trading strategy and said that he believed all of his actions were legal actions on the free market.

The FBI, in its recent complaint, said Eisenberg’s actions constituted both fraud and market manipulation because he deliberately and knowingly engaged in a scheme involving the intentional and artificial manipulation of contract prices. perpetual futures on the mango markets.

This eventually allowed him to drain $110 million worth of cryptocurrencies, most of which came from the deposits of other Mango Markets investors.

Because of [Eisenbergs] withdrawals, other investors with deposits in Mango Markets lost much or all of those deposits, FBI Special Agent Brandon Racz explained in the December 23 complaint.

Racz said Eisenberg may have known his actions were also illegal, because the day after the Mango Markets exploit, Eisenberg flew from the United States to Israel.

From the timing of the theft, the trip appears to have been an effort to avoid being apprehended by law enforcement immediately following the market manipulation scheme, he said.

Eisenberg was arrested Dec. 26 in Puerto Rico, according to a filing from the U.S. Attorney for the Southern District of New York.

Related: How Low Liquidity Led Mango Markets to Lose Over $116 Million

In November, Eisenberg tried his luck again, this time on decentralized finance (DeFi) protocol Aave, borrowing a loan of 40 million CRV tokens from Aave and betting on lower prices through a series of sell-offs. uncovered sophisticated.

However, the plan ultimately did not succeed as the price actually rose during the attack leading to losses due to the large short position.

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