According to Bloomberg, Avraham Eisenberg, a trader accused of using the Solana-based decentralized finance platform Mango Markets to exploit a vulnerability and steal $110 million, has been found guilty of fraud in the first criminal trial in the United States involving cryptocurrency manipulation.
Federal jurors in New York on Thursday (18th) convicted Avraham Eisenberg of commodities fraud, commodities manipulation, and wire fraud for his trading activities on October 11, 2022. Sentencing is scheduled for July 29th. He faces 20 years in prison for wire fraud and 10 years for the other charges.
Prosecutors alleged that Eisenberg, who claimed to be an “applied game theorist,” used a false identity to conduct trades on Mango Markets, artificially inflating the price of Mango’s native token MNGO and perpetual futures contracts. He then exploited a feature of the platform that allowed him to “borrow” his holdings and withdrew $110 million worth of cryptocurrency, with no intention of repayment. Eisenberg later negotiated with Mango DAO and agreed to return $67 million.
In related news titled “DeFi platform Mango exploited: over $100 million loss, initial funding from FTX, hacker proposes in governance forum,” prosecutors stated that Eisenberg “pumped” the price of the MNGO token, enabling him to carry out his premeditated fraudulent scheme on Mango Markets. “He planned to take the money and run,” according to the prosecution. Following the verdict, Eisenberg’s lawyer Brian Klein issued a statement saying, “We are obviously disappointed, but we will continue to fight for our client. We plan to file a series of post-trial motions.”
Klein argued that his client executed a completely legal strategy, “fully compliant” with the smart contract governing Mango Markets, which warned users that the software was “unaudited” and that they assumed the risks. However, Assistant U.S. Attorney Thomas Burnett argued that Mango Markets’ platform rules did not protect Eisenberg from prosecution for fraud and manipulation.
In related news titled “Identity of Mango exploit user confirmed! Confession released claiming ‘my high-profit trading strategy’ is completely legal,”
