Maybe it WAS illegal: Mango Markets exploiter arrested on fraud charges

The crypto trader down the $110 cardinal exploit of decentralized speech Mango Markets has been arrested successful Puerto Rico — and charged with marketplace manipulation and fraud.

According to a antecedently sealed complaint filed with the Southern District of New York made nationalist connected Dec. 27, the Federal Bureau of Investigation (FBI) pinned Avraham Eisenberg with 1 number of “commodities fraud” and 1 number of “commodities manipulation” successful narration to his exploit of Mango Markets.

Eisenberg’s Oct. 11 exploit of Mango Markets worked by manipulating the worth of the platform’s autochthonal token MNGO, artificially inflating its terms comparative to USD Coin (USDC).

Eisenberg and his squad past took retired “massive loans” against its inflated collateral, which drained Mango’s treasury of astir $110 cardinal worthy of assorted cryptocurrencies.

A time aboriginal connected Oct. 12, Mango entered into negotiations with Eisenberg for the instrumentality of the funds.

On Oct. 15, Eisenberg publically fessed up to exploiting the crypto exchange, stating astatine the clip helium was progressive successful a squad that “operated a highly profitable trading strategy” and said that he believed each his actions were “legal unfastened marketplace actions.”

The FBI successful its caller ailment stated the actions by Eisenberg represent some fraud and marketplace manipulation, arsenic helium “willfully and knowingly” engaged successful a strategy involving the “intentional and artificial manipulation” of the terms of perpetual futures connected Mango Markets.

This yet allowed him to drain $110 cardinal worthy of cryptocurrencies — astir of which came from the deposits of different Mango Markets investors.

“Due to [Eisenberg’s] withdrawals, different investors with deposits connected Mango Markets mislaid much, oregon all, of those deposits,” explained FBI peculiar cause Brandon Racz successful the Dec. 23 complaint.

Racz said Eisenberg whitethorn person known his actions were amerciable arsenic well, arsenic the time aft the Mango Markets exploit, Eisenberg flew from the United States to Israel.

“Based connected the timing of the flight, the question appears to person been an effort to debar apprehension by instrumentality enforcement successful the contiguous aftermath of the Market Manipulation Scheme,” helium said.

Eisenberg was arrested connected Dec. 26 successful Puerto Rico, according to a filing from the United States Attorney Southern District of New York.

Related: How debased liquidity led to Mango Markets losing implicit $116 cardinal

In November, Eisenberg tried his luck again, this clip connected Decentralized Finance (DeFi) protocol Aave, taking retired a indebtedness of 40 cardinal CRV tokens from Aave and betting connected a driblet successful terms done a bid of sophisticated abbreviated sales.

However, the program yet didn’t win arsenic the terms really roseate during the attack, resulting successful losses owed to the important abbreviated position.