CFTC files suit against Avraham Eisenberg for market manipulation in Mango exploit

The United States Commodity Futures Trading Commission (CFTC) filed suit against self-described integer creator Avraham Eisenberg connected Jan. 9, charging him with 2 counts of marketplace manipulation successful transportation with an exploit of decentralized concern level Mango Markets. Eisenberg was arrested connected related charges connected Dec. 27 and is presently successful custody.

The CFTC claimed successful its suit that Eisenberg “engaged successful a manipulative and deceptive strategy to artificially inflate the terms of swaps offered by Mango Markets […] culminating successful the misappropriation of implicit $100 cardinal from the platform” successful October. According to the filing, Eisenberg “purchased implicit 400 cardinal MNGO-USDC Swaps connected Mango Markets with a presumption size of astir $19 million.”

Eisenberg past bought “large quantities” of Mango’s MNGO coin connected 3 exchanges that service arsenic Mango oracles. This forced up the terms of MNGO, and Eisenberg borrowed integer assets worthy astir $144 cardinal from Mango Markets astatine the inflated price, aft which the MNGO terms fell, leaving Mango Markets illiquid. His actions resulted successful a “wash” transaction, according to the CFTC. According to the CFTC:

“The extremity of Defendant’s strategy was straightforward: to artificially inflate the worth of his swap declaration holdings connected Mango Markets done terms manipulation, truthful that helium could “borrow” a important magnitude of integer assets that helium had nary volition to repay.”

Eisenberg revealed himself arsenic the Mango Markets exploiter successful an Oct. 15 tweet, and claimed his actions were legal. This came aft Eisenberg had anonymously demanded 70 million USD Coin (USDC), worthy $70 million, arsenic a bug bounty. The Mango Markets assemblage voted to fto him keep $47 cardinal and not prosecute transgression charges against him.

I judge each of our actions were ineligible unfastened marketplace actions, utilizing the protocol arsenic designed, adjacent if the improvement squad did not afloat expect each the consequences of mounting parameters the mode they are.

— Avraham Eisenberg (@avi_eisen) October 15, 2022

The U.S. Justice Department arrested him connected Dec. 27, however, and charged him with 1 number commodities fraud and 1 number of commodities manipulation. The CFTC is alleging helium violated the Commodities Exchange Act and respective committee regulations.

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The CFTC requested a assemblage proceedings for him, with a imperishable injunction against commodities trading activities, outgo of civilian penalties, disgorgement and reimbursement of funds received successful the exploit and benefits derived from them.