Maybe it WAS illegal: Mango Markets exploiter arrested on fraud charges
The crypto trader behind the $110 million exploit of decentralized exchange Mango Markets 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 Dec. 27, the Federal Bureau of Investigation (FBI) pinned Avraham Eisenberg with one count of “commodities fraud” and one count of “commodities manipulation” in relation to his exploit of Mango Markets.
Eisenberg’s Oct. 11 exploit of Mango Markets worked by manipulating the value of the platform’s native token MNGO, artificially inflating its price relative to USD Coin (USDC).
Eisenberg and his team then took out “massive loans” against its inflated collateral, which drained Mango’s treasury of around $110 million worth of various cryptocurrencies.
A day later on Oct. 12, Mango entered into negotiations with Eisenberg for the return of the funds.
On Oct. 15, Eisenberg publicly fessed up to exploiting the crypto exchange, stating at the time he was involved in a team that “operated a highly profitable trading strategy” and said that he believed all his actions were “legal open market actions.”
The FBI in its recent complaint stated the actions by Eisenberg constitute both fraud and market manipulation, as he “willfully and knowingly” engaged in a scheme involving the “intentional and artificial manipulation” of the price of perpetual futures on Mango Markets.
This ultimately allowed him to drain $110 million worth of cryptocurrencies — most of which came from the deposits of other Mango Markets investors.
“Due to [Eisenberg’s] withdrawals, other investors with deposits on Mango Markets lost much, or all, of those deposits,” explained FBI special agent
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