On Monday, the Commodity Futures Trading Commission (CFTC) brought charges against Avraham Eisenberg, accusing him of manipulating the Mango Markets decentralized exchange and stealing more than $110 million in digital assets. This follows last week’s charges brought against Eisenberg by the Department of Justice in connection with a hack that took place on October 11, 2022.
The goal of Defendant’s scheme was straightforward: to artificially inflate the value of his swap contract holdings on Mango Markets through price manipulation so that he could ‘borrow’ a significant amount of digital assets that he had no intention to repay,
the CTFC wrote in its filing.
Eisenberg “purchased over 400 million MNGO-USDC Swaps on Mango Markets with a position size of approximately $19 million,” according to the filing. The trader used multiple accounts to buy, sell, and hedge the price of the MNGO token, stealing more than $100 million in cryptocurrency from the decentralized exchange.
“In this way, Defendant placed himself on both sides of the same transaction, which effectively resulted in a ‘wash’ transaction,” the agency says.
Later, Eisenberg stated that he was part of a group that used “a highly profitable trading strategy” and that some of the funds would be returned to Mango. In subsequent tweets, he claimed that his actions were legal.
Following the hack, Mango DAO offered the Mango Market attacker a $47 million bug bounty and a promise not to press charges if they returned $67 million in tokens. The Mango Markets community voted to let him keep the $47 million and avoid criminal charges.
However, on December 27, the US Justice Department arrested Eisenberg and charged him with one count of commodities fraud and one count of commodities manipulation.
The CFTC has now charged Eisenberg with fraud, market manipulation, and violation of the Commodity Exchange Act. It says it wants monetary penalties, a ban on trading digital asset commodities, and fund restitution.
The CFTC, like the DOJ, cited Eisenberg’s public statements as evidence of his actions. They noted that Eisenberg “admitted to his scheme” in a Discord server before the exploit and in tweets after the funds were drained. The CFTC’s statement alleged that Eisenberg’s actions were illegal, constituting “blatant manipulation of spot prices and swaps” and not as he had believed it to be legal.
