Jury Convicts Avraham Eisenberg for Mango Markets $110M Exploit

A federal jury in the Southern District of New York has found Avraham ‘Avi’ Eisenberg guilty of having taken part in a $110 million exploit of the decentralized cryptocurrency exchange Mango Markets.

After two days of deliberations, the jury returned a verdict, finding Eisenberg guilty of several counts, such as wire fraud, commodities fraud, and commodities manipulation. The incident, which occurred on October 11, 2022, led to significant disruptions within the digital asset platform.

Details of the Exploit

The prosecution described how Eisenberg carried out a well-planned assault on Mango Markets by depositing huge amounts of USDC stablecoin on the platform. This capital was then utilized to build an overinflated position in the platform’s native token, MANGO, which resulted in its price being artificially pumped by over 1000% within an hour.

The overnight increase in valuation enabled Eisenberg to take out hefty loans against the inflated assets and withdraw large volumes of other digital tokens from the platform.

Eisenberg’s Defense and Trial Testimonies

Throughout the trial, his defense team contended that his actions were consistent with the trading practices allowed on Mango Markets. His legal team claimed that the way the platform was designed and its operating mechanisms made such actions possible and, therefore, were not illegal manipulations or fraud. Still, testimonies from the affected users and intricate analysis from financial experts portrayed a different view, revealing the dire consequences on the retail segment of the market and the overall market stability.

During the trial, victims of the exploit testified by sharing their stories. One of the testimonies came from a UK-based customer who lost $124,000 because he was unable to withdraw funds during the market chaos.

This subjective narrative highlighted the wider effect on Mango Markets’ clients who could not access their digital assets. The court also considered the evidence that Eisenberg had studied some terms concerning market manipulation and criminal investigations before he implemented his strategy.

Sentencing and Regulatory Implications

Having now been convicted, Avraham Eisenberg could be imprisoned for up to 20 years with the sentencing date set for 29 July 2024. This case is a landmark in the history of U.S. law in the context of cryptocurrency market manipulation.

Additionally, the verdict opens the door for further civil enforcement actions by regulatory bodies such as the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, which had previously paused their proceedings pending the outcome of this trial.

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