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Crypto Trader Found Guilty of Manipulating Solana DeFi Platform
In a recent development, crypto trader Avraham Eisenberg was convicted in U.S. federal court for manipulating the Solana decentralized finance (DeFi) trading platform Mango Markets in October 2022, resulting in the theft of $110 million worth of cryptocurrency.
Eisenberg, 27 years old, was found guilty on all counts of commodities fraud, commodities manipulation, and wire fraud by a federal jury in Manhattan. This verdict followed a week-long trial, and Eisenberg faces a maximum sentence of 20 years in prison, pending sentencing by New York District Court Judge Arun Subramanian.
Mango Markets: A Solana-Based DEX
Mango Markets is a decentralized exchange (DEX) built on Solana and governed by a decentralized autonomous organization (DAO) comprising holders of its native token, MNGO. The platform enables users to engage in activities such as lending, borrowing, swapping, and leveraged trading of cryptocurrencies. Eisenberg’s manipulation scheme involved selling significant amounts of MNGO perpetuals across accounts under his control, leading to a substantial increase in the price of MNGO.
Through his orchestrated trades, Eisenberg was able to deceive the protocol into authorizing a loan of $110 million in various cryptocurrencies, effectively draining Mango’s liquidity pools. Subsequently, he proposed anonymously to the DAO that he would return $67 million of the stolen funds in exchange for retaining the remaining $43 million and immunity from legal action. The DAO rejected this proposal.
Legal Defense and Prosecution
Eisenberg’s defense team, headed by crypto lawyer Brian Klein, maintained that his actions on Mango Markets were lawful and aligned with the protocol’s rules in place at the time. They argued that the smart contract executed instructions within its defined parameters. Conversely, the prosecution contended that Eisenberg engaged in fraudulent activities by artificially inflating asset prices to leverage his positions as collateral without any intention of repayment.
During the trial, evidence was presented showcasing Eisenberg’s internet searches for topics related to market manipulation and fraud, along with records indicating his flight to Israel post-exploitation discovery. Prosecutors argued that these actions demonstrated Eisenberg’s awareness of the criminal nature of his activities.
The jury concluded that Eisenberg exploited vulnerabilities in the price oracle, deceiving the system for personal gain, a clear indication of fraudulent behavior. Following his arrest in Puerto Rico in December 2022, Eisenberg has remained in federal custody awaiting sentencing by Judge Arun Subramanian.
Editor’s note: This story has been updated post-publication with additional information.
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