According to CryptoPotato, a federal jury has found Avraham Eisenberg, a cryptocurrency trader, guilty of fraud and market manipulation. The charges were related to Eisenberg's exploitation of Mango Markets, a decentralized finance (DeFi) protocol built on the Solana blockchain. This is the first criminal case by the U.S. Department of Justice targeting cryptocurrency market manipulation.
Eisenberg, 28, was convicted in a federal court in Manhattan on charges of commodities fraud, commodities manipulation, and wire fraud. Nicole M. Argentieri, head of the Justice Department’s Criminal Division, stated that Eisenberg executed a manipulative trading scheme on a cryptocurrency exchange, defrauding the exchange and its investors out of $110 million.
Mango Markets is a decentralized platform managed by Mango DAO that facilitates the lending, borrowing, swapping, and leveraged trading of cryptocurrencies. During the trial, it was revealed that Eisenberg used two accounts to execute simultaneous buy and sell orders for futures contracts tied to the value of Mango’s native token, MNGO, and the stablecoin USD Coin on October 11, 2022. These manipulative trades inflated the value of his contracts by 1,300% in just 20 minutes, enabling Eisenberg to borrow against his artificially inflated holdings and withdraw approximately $110 million worth of various cryptocurrencies.
Despite Eisenberg’s claims that his trades were lawful and transparent, the jury’s deliberations concluded in less than a day. Eisenberg’s attorney, Brian Klein, expressed disappointment and announced plans to pursue post-trial motions to advocate for his client. Eisenberg has agreed to return $67 million on the condition that other token holders refrain from pursuing legal action against him or freezing his assets.
Following his arrest on December 26, 2022, in San Juan, Puerto Rico, Eisenberg has remained in custody after prosecutors argued that he posed a flight risk. Timothy Langan, Executive Assistant Director of the FBI’s Criminal, Cyber, Response, and Services Branch, commented on the case, emphasizing the agency’s commitment to holding individuals accountable for fraudulent activities. Eisenberg’s sentencing is scheduled for July 29, with potential penalties including a maximum of 10 years in prison for commodities fraud and manipulation and up to 20 years for wire fraud.