CFTC accuses Mango Markets Exploiter of market manipulation

CFTC accuses Mango Markets Exploiter of market manipulation

The Commodities and Futures Trading Commission (CFTC) has charged Mango Markets exploiter Avraham Eisenberg with violating federal commodities laws during his $110 million manipulation attack in October.

The commission is seeking various forms of punishment and relief from the attacker, including trade bans, restitution and disgorgement.

Eisenberg's crimes

Pro dieComplaintThe CFTC's filing Monday said Eisenberg misappropriated over $100 million from the Mango Markets platform by engaging in a "manipulative" and "deceptive" scheme to inflate the price of swaps on the platform.

During theOctoberTo take advantage of this, Eisenberg manipulated the price of MNGO – the platform’s native token – such that he was able to “borrow” significant funds from the platform that he had no intention of repaying. He did this by initially purchasing 400 million MNGO-USDC swaps on Mango Markets for about $19 million. Due to MNGO's relative illiquidity, this purchase caused the token's price to skyrocket from $0.04 to $0.54 apiece in 30 minutes.

Using the protocol's oracle, which reflects this newly inflated MNGO price, Eisenberg was able to "borrow" - or withdraw - the protocol from all available liquidity. This included $114 million in far more liquid and popular cryptos such as Bitcoin, Ether and Tether. This left Mango Markets and its other users with smaller position sizes “a mostly empty pocket in hand.”

“Through this conduct, the defendant has engaged in, is engaging in, or is about to engage in fraudulent and manipulative acts and practices in violation of the Commodity Exchange Act,” the commission stated.

Admission to law

While most DeFi hackers are careful to keep their identities secret, Eisenberg publicly bragged about his Mango Markets exploit shortly after his attack. Weeks later, he described his exploit as a “profitable business.”accusatoryhis critics are “jealous”.

“I believe that all of our actions were legal open market actions that used the protocol as intended, even if the development team did not foresee all the consequences of setting the parameters as they were,” he said at the time.

However, the CFTC argued the opposite in its filing, saying the exploiter's actions "constituted blatant manipulation of spot prices and swaps."

Eisenberg wasarrestedLate last year in Puerto Rico, the Justice Department filed similar charges in New York. In a signed statement, FBI Special Agent Brandon Racz stated that Eisenberg may have secretly known that his actions were illegal based on his departure to Israel within 24 hours of exploiting the Defi exchange.

Eisenberg and his team were later responsible for launching oneshort attackon Aave, which ultimately failed and resulted in significant losses on his part.

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