According to Bloomberg, a federal jury in New York is deliberating on a case involving a trader accused of manipulating the Mango Markets cryptocurrency exchange to steal $110 million. The prosecution alleges that Avi Eisenberg, 28, used fake trades of Mango’s token, MNGO, to manipulate futures contracts on Oct. 11, 2022, inflating the value of swaps by 1,300% in 20 minutes. Eisenberg then allegedly borrowed against these inflated contracts to steal assets from the platform.
Assistant US Attorney Peter Davis described the actions as 'old-fashioned manipulation and fraud,' accusing Eisenberg of pumping the price and lying to steal money. This trial, which began last week, is the first time a US jury will decide on a case of crypto market manipulation.
Eisenberg's attorney, Brian Klein, argued that his client engaged in a legal trading strategy, putting his own money at risk and complying with the smart contracts that controlled the decentralized finance platform. Klein stated that Eisenberg doesn't dispute making a series of trades taking opposing long and short positions, but argued that taking big risks is not illegal.
Eisenberg is charged with commodities fraud, commodities manipulation, and wire fraud. After his alleged theft, Eisenberg agreed to return $67 million in crypto in exchange for the DAO not pursuing his prosecution or freezing his remaining assets. He left Puerto Rico, where he was living, soon after his Mango trades and flew to Israel. Upon his return to Puerto Rico on Dec. 26, 2022, US agents arrested him. He has been in jail since then, as a judge ruled he poses a risk of fleeing before trial.
The prosecution alleges that Eisenberg executed some trades by falsely using the identity of a Ukrainian woman after buying her login information. He also allegedly manipulated the price of futures contracts based on the relative value of MNGO and a stablecoin called USDC. The defense maintains that Eisenberg didn't steal from Mango Markets when he hit the 'borrow' button on the platform, arguing that he withdrew his initial investment and trading profits he made from the site.