Mango Markets exploiter arrested on fraud charges – it may have been illegal

Mango Markets exploiter arrested on fraud charges - it may have been illegal

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

According Following a previously closed complaint filed in the Southern District of New York and made public on December 27, the Federal Bureau of Investigation (FBI) charged Abraham Eisenberg with one count of merchandise fraud and one count of merchandise manipulation in connection with his operation of Mango. Markets.

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

Eisenberg and his team then took out “large loans” against his inflated collateral, draining Mango’s treasury of about $110 million in various cryptocurrencies.

A day later, on October 12, Mango entered into negotiations with Eisenberg for a refund.

A few days later, on October 15, Mango Markets. confirmed that $67 million in various crypto assets were returned.

Eisenberg then publicly admitted to using a cryptocurrency exchange, stating that he was involved with a team that was “using a high-yield trading strategy” and said that he believed all of his activities were “legitimate open market activities.”

The FBI, in a recent complaint, said Eisenberg’s actions constituted both fraud and market manipulation because he “intentionally and knowingly” engaged in a scheme involving “intentional and artificial manipulation” of the price of perpetual futures on Mango Markets.

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

“Because of [Eisenberg’s] withdrawals, other investors with deposits at Mango Markets lost most or all of those deposits,” FBI Special Agent Brandon Rach explained in a Dec. 23 complaint.

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

“Based on the timing of the flight, the trip appears to have been an attempt to avoid being caught by law enforcement in the immediate aftermath of a market manipulation scheme,” he said.

Eisenberg was arrested on December 26 in Puerto Rico. registration from the U.S. Attorney for the Southern District of New York.

Connected: How low liquidity caused Mango Markets to lose over $116 million

In November, Eisenberg tried his luck again, this time at Aave’s decentralized finance (DeFi) protocol, borrowing 40 million CRV tokens from Aave and betting on a price drop in a series of sophisticated short sales.

However, the plan ultimately failed as the price actually rose during the attack, resulting in losses due to a significant short position.