According to court records, Avraham Eisenberg was detained in Puerto Rico on Monday for stealing $110 million worth of cryptocurrency from the DeFi trading platform Mango Markets.
A self-described game theorist may be the first US person to face prosecution for manipulating a decentralised finance (DeFi) trading platform after admitting his role in the draining of Mango Markets’ treasury immediately after the event in mid-October.
An unsealed court document from Tuesday indicates that commodities fraud and manipulation charges would be brought against Eisenberg. Fines and jail terms are both possible responses to the allegations.
FBI Special Agent Brandon Racz’s sworn deposition claims that Eisenberg “willfully and intentionally” influenced the sale of a commodity, namely futures contracts on Mango Markets.
A second complaint by Assistant US Attorney Thomas Burnett states that Eisenberg was detained in Puerto Rico on Monday night.
The unsealed complaint alleges that Eisenberg artificially inflated the value of MNGO, the native token of Mango Marketplaces, by manipulating the price of perpetual contracts. He bought back a large number of MNGO perpetuals, driving their price by 1,300% in just over an hour.
After making a killing on the Mango Markets platform, Eisenberg decided to cash out all of his bitcoin holdings and borrow against the value of his stake. The lawsuit claims that he made $110 million.
The deposition quotes Eisenberg’s Twitter to claim that the platform is now insolvent due to the situation.
Statement on recent events:
I was involved with a team that operated a highly profitable trading strategy last week.
— Avraham Eisenberg (@avi_eisen) October 15, 2022
Eisenberg met with Mango Markets after the trade and promised to repay $67 million to the DAO that controls it. Users that lost money because of Eisenberg’s assault were supposed to get their money back via Mango DAO.
The Mango Markets Discord server lit up with joyful memes after hearing of Eisenberg’s arrest.