Avraham Eisenberg, who confessed emptying the decentralized finance (DeFi) protocol Mango Markets with his very successful trading method, has been detained by U.S. authorities. A document states that he was taken into custody on Monday in Puerto Rico.
Exploiter of the Mango Markets Is Caught
At about the middle of October, Eisenberg had compromised the DeFi protocol. Through the use of two identities, he artificially inflated the price of Mango’s crypto token MNGO by 1,300 percent in just an hour by selling several perpetual contracts from one account to the other. He then borrowed $110 million in more cryptocurrencies from Mango Markets using the token as security, and promptly withdrew the money. To put it another way, he effectively stole all the cryptocurrency stored on the DeFi network.
Eisenberg engaged in a scheme involving the intentional and artificial manipulation of the price of perpetual futures contracts on a cryptocurrency exchange called Mango Markets, and other manipulative and deceptive devices and contrivances,
according to a deposition signed by an FBI Special Agent named Brandon Racz.
Agreement Reached with Mango Markets
Also, after a week of manipulation, he finally acknowledged to being involved in draining the DeFi protocol. Nonetheless, he justified his behavior by saying it was legitimate.
I believe all of our actions were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are.
Tweet from Avraham Eisenberg (@avi eisen) dated October 15, 2022.
He went so far as to say that because of his activities, Mango Markets went bankrupt and clients lost access to their money. Later on, he reached an agreement with Mango Markets in which he would pay back $67 million to the DAO that oversaw the protocol.
The protocol creators will not “pursue any criminal investigations or freezing of money after the tokens are returned back,” according to a message issued to the Mango Markets community following the settlement.
As of right now, Eisenberg is being accused of commodities fraud and commodities manipulation. If he’s found guilty, he might go to jail and have to pay a fine. It’s also the very first time law enforcement in the United States has taken legal action against someone for breaking a DeFi protocol.