Federal Jury Finds Avraham Eisenberg Guilty of $110 Million Mango Markets Fraud

Controversial crypto trader Avraham Eisenberg has been found guilty in a $110 million security breach fraud by a federal jury in the Southern District of New York. Following his arrest in Puerto Rico in December 2022, Eisenberg was charged with commodities fraud, market manipulation, and wire fraud related to the Mango Markets exploit.

Eisenberg inserted $5 million of USDC stablecoin into Mango Markets in October 2022, causing the event. The jury deliberated for two days before reaching a decision, which found Eisenberg guilty on many counts, including wire fraud, commodities fraud, and commodities manipulation.

How it happened

The court findings paint a clear picture of how the heist was carried out. According to the findings, Eisenberg artificially raised the price of MNGO, the platform’s token, by around 1,000% in a single hour after injecting that large amount of USDC. He was able to borrow and withdraw more tokens thanks to the fictitious increase, which significantly increased the platform’s negative debt position. Furthermore, he was able to remove significant amounts of other digital tokens from the platform thanks to the overnight surge in worth.

However, Eisenberg paid $67 million to Mango Markets, keeping $47 million per community governance vote. A few days after the exploit, he claimed that his actions were part of a lawful, very profitable trading plan, exploiting the platform’s capabilities as intended.

His defense team argued throughout the trial that his conduct was compliant with the permitted trading methods on Mango Markets. They argued that his activities were not manipulative or fraudulent because of the platform’s operational mechanisms and design. However, accounts from the impacted users and detailed analysis from financial specialists presented a different picture, exposing the grave implications for the market’s retail sector and stability as a whole.

During the trial, several victims came forward to testify. Notably, a UK-based customer testified about losing $124,000 and not being able to withdraw funds during that time. Meanwhile, Bloomberg disclosed that Eisenberg’s internet searches for terms related to market manipulation, fraud, and FBI surveillance-related words were visible to jurors. In the end, the exploit cost Mango Markets around $116 million in losses. The breach of the Mango Market and the substantial loss suffered by customers underscores the security issues facing the crypto industry.

At the time of writing, Mango (MNGO) is demonstrating very impressive price movement. According to data from CoinMarketCap, the token is currently changing hands at $0.02916, representing an 11% surge in the last 24 hours. Additionally, its 24-hour trading volume is up by 18% to $371k with a live market cap of $29 million.