CFTC Accuses Avraham Eisenberg of Market Manipulation and Sues
2023.01.10 04:12
CFTC Accuses Avraham Eisenberg of Market Manipulation and Sues
By Tiffany Smith
Budrigannews.com – On January 9, the self-described digital artist Avraham Eisenberg was charged with two counts of market manipulation in connection with an exploit of the decentralized finance platform Mango Markets by the United States Commodity Futures Trading Commission (CFTC). On December 27, Eisenberg was taken into custody on related charges.
In its lawsuit, the CFTC claimed that Eisenberg “engaged in a manipulative and deceptive scheme to artificially inflate the price of swaps offered by Mango Markets […] culminating in the misappropriation of more than $100 million from the platform” in October. Eisenberg “purchased over 400 million MNGO-USDC Swaps on Mango Markets with a position size of approximately $19 million,” as stated in the filing.
Following that, Eisenberg made purchases of “large quantities” of Mango’s MNGO coin on three exchanges that act as oracles for Mango. Eisenberg borrowed digital assets worth approximately $144 million from Mango Markets at the inflated price because this increased the price of MNGO. Mango Markets became illiquid as a result of the falling MNGO price. The CFTC wrote that his actions resulted in a “wash” transaction:
“The goal of Defendant’s scheme was straightforward: to artificially inflate the value of his swap contract holdings on Mango Markets through price manipulation, so that he could ‘borrow’ a significant amount of digital assets that he had no intention to repay.”
In a tweet on Oct. 15, Eisenberg said that he was the Mango Markets exploiter and that his actions were legal. Following Eisenberg’s anonymous demand for a $70 million bug bounty in the form of 70 million USD Coin (USDC), this occurred. In a vote, the Mango Markets community approved letting him keep $47 million and not charging him with a crime.
I believe all of our actions were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are.
— Avraham Eisenberg (@avi_eisen) October 15, 2022
However, Eisenberg was taken into custody by the United States Justice Department on December 27 and charged with one count each of commodities manipulation and commodities fraud. He is accused of breaking the Commodities Exchange Act and a number of commission rules, according to the CFTC.
More Tornado Cash operates despite sanctions
For him, the CFTC requested a jury trial, a permanent injunction against commodities trading, civil penalties, disgorgement, and reimbursement of funds received in the exploit and benefits derived from them.
