Cryptocurrency investor Avraham Eisenberg has been arrested in Puerto Rico for fraud and commodity manipulation for stealing more than $100 million from decentralized finance (DeFi) protocol Mango Markets.
This is the first time that a US resident has been accused of tampering with a DeFi platform.
Eisenberg loses $110 million from Mango Markets
Recall that Eisenberg admitted that his team used a “highly profitable trading strategy” to drain Mango Markets of $110 million worth of digital assets by manipulating the price of the platform’s native token, MNGO, and withdrawing almost all crypto deposits from the protocol.
Because of his actions, investors lost almost all of their deposits on the DeFi platform, although Eisenberg later returned about $67 million to Mango Markets.
Fraud and manipulation charges
Despite the refunds, the DeFi protocol eventually became insolvent, and Eisenberg now faces charges of fraud and commodity manipulation, which could result in fines or jail time.
Eisenberg was arrested on Monday 26 December. According to a criminal complaint filed on Tuesday, the defendant allegedly inflated the swaps’ price by 1,300% before using the inflated swaps to borrow and withdraw assets within 20 minutes.
The complaint alleges that the defendant “knowingly and knowingly” manipulated the sale of a commodity — specifically, futures contracts on the DeFi protocol.
The filing, signed by FBI Special Agent Brandon Rush, says Eisenberg “engaged in a scheme involving willful and artificial price manipulation of perpetual futures contracts on a cryptocurrency exchange called Mango Markets, and other deceptive and deceptive devices and oddities.”
Rakes: Eisenberg probably knew his actions were illegal
Shortly after his attack on Mango Markets, Eisenberg said in an interview that his team’s actions were legal and that affected projects could not press charges because the exploit could not be classified as a hack.
However, Rush suggested that Eisenberg may have known that his actions were illegal because he had left the United States for Israel within 24 hours of benefiting from the exchange. According to the FBI agent, the Mango Markets developer quickly left the United States to avoid arrest.
Interestingly, Mango Markets is not the only DeFi protocol that Eisenberg and his team have tried to exploit. In November, the trader sought after a complex vulnerability in DeFi platform Aave using a series of short attacks. But the attempt failed, resulting in a huge loss for the developer.
After Mango Markets $110M Arrest, New York Face Charges Appeared For The First Time On CryptoPotato.