Mango Markets exploiter arrested on fraud charges

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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 and made pub­lic on Dec. 27, the Fed­er­al Bureau of Inves­ti­ga­tion (FBI) pinned Avra­ham Eisen­berg with one count 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. 

Days lat­er on Oct. 15, Man­go Mar­kets con­firmed that $67 mil­lion in var­i­ous cryp­to assets had been returned.

Eisen­berg then pub­licly fessed up to exploit­ing the cryp­to exchange, stat­ing that 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 Bran­don Racz in the Dec. 23 complaint. 

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

“Based on the tim­ing of the flight, the trav­el appears to have been an effort to avoid appre­hen­sion by law enforce­ment in the imme­di­ate after­math of the Mar­ket Manip­u­la­tion Scheme,” he said. 

Eisen­berg was arrest­ed on Dec. 26 in Puer­to Rico, accord­ing to a fil­ing from the Unit­ed States Attor­ney South­ern Dis­trict of New York.

Relat­ed: How low liq­uid­i­ty led to Man­go Mar­kets los­ing over $116 million 

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

How­ev­er, the plan ulti­mate­ly didn’t suc­ceed as the price actu­al­ly rose dur­ing the attack, result­ing in loss­es due to the sig­nif­i­cant short position. 



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