Avraham Eisenberg’s “highly profitable trading strategy” did not sit well with federal agents.
Avraham Eisenberg, the crypto investor whose “highly profitable trading strategy” depleted DeFi trading platform Mango Markets of $110 million in cryptocurrency, was arrested Monday in Puerto Rico, according to court documents.
Shortly after the incident in mid-October, the self-described game theorist admitted his role in draining Mango Markets’ treasury, and he may now be the first US resident to face charges for his role in manipulating a decentralized finance (DeFi) trading platform.
According to a filing made public on Tuesday, Eisenberg faces charges of commodities fraud and commodities manipulation. Penalties for the charges could range from fines to prison time.
According to an FBI Special Agent Brandon Racz deposition, Eisenberg “willfully and knowingly” manipulated the sale of a commodity, specifically futures contracts on Mango Markets.
“Eisenberg engaged in a scheme involving the intentional and artificial manipulation of the price of perpetual futures contracts on Mango Markets, as well as other manipulative and deceptive devices and contrivances.”
More information: Mango Markets Exploiter Outs Himself, Returns the Majority of the Money
According to a second filing signed by Assistant U.S. Attorney Thomas Burnett, Eisenberg was arrested Monday night in Puerto Rico.
Eisenberg allegedly manipulated the price of perpetuals contracts (a type of futures contract popular in crypto markets) for Mango Markets’ native token MNGO, according to the unsealed complaint. He sold massive amounts of MNGO perpetual contracts to himself, effectively increasing the price of those contracts by 1,300% in less than an hour.
Eisenberg then borrowed against his position’s value and “withdrew essentially all of the cryptocurrency deposits on the Mango Markets platform.” According to the complaint, he earned $110 million.
Statement regarding recent events:
Last week, I was part of a team that used a highly profitable trading strategy. Avraham Eisenberg (@avi eisen) 10/15/2022
According to the deposition, the platform became “insolvent” as a result, citing Eisenberg’s own Twitter account.
Following the trade, Eisenberg negotiated with Mango Markets and agreed to return $67 million to the DAO that governs the company. Mango DAO intended to return those funds to victims of Eisenberg’s attack.