Shalini Nagarajan

Avraham “Avi” Eisenberg, exploiter of DeFi protocol Mango Markets, is looking to retain a portion of the cryptocurrency he managed to gain from manipulation of the price of the Mango token (MNGO).&nbsp;



Eisenberg’s attorneys filed a motion Wednesday opposing the protocol’s lawsuit that seeks $47 million in damages from Eisenberg whose self-proclaimed “profitable trading strategy” netted him tens of millions in October.



“Mango Labs never explains in the [Preliminary Injunction] Motion where it came up with the amount of $47 million,” the attorneys said in the <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.592995/gov.uscourts.nysd.592995.35.0.pdf" target="_blank" rel="noreferrer noopener">motion</a>, adding that the protocol waited more than three months after the events and after the “matter was settled.”



<a href="https://blockworks.co/tag/mango-markets" target="_blank" rel="noreferrer noopener">Mango Markets</a>, a Solana-based DeFi platform, was <a href="https://blockworks.co/news/mango-markets-mangled-by-oracle-manipulation-for-112m">drained of over $100 million</a> in October. Mango said the hacker, Eisenberg, was able to drain funds via an oracle price manipulation. 



Eisenberg purportedly used two addresses to manipulate the price of MNGO — Mango’s native token and collateral asset — from $0.04 to a peak of $0.91. This allowed him to borrow heavily against the inflated MNGO collateral, to the tune of about $114 million.



He proposed, via the Mango DAO governance forum, to return a portion of the funds including Marinade-staked Solana (mSOL), native <a href="https://blockworks.co/price/sol" target="_blank" rel="noreferrer noopener">SOL</a> and the MNGO token, but claimed the rest as a bounty. But Eisenberg offered recompense of $67 million to <a href="https://blockworks.co/news/mango-dao-readies-42m-to-make-users-whole">make users whole</a> on the condition that Mango wouldn’t push for criminal charges. 



Mango DAO voters then agreed to a proposal that would allow Eisenberg to retain $47 million of the originally stolen amount, as long as he would return the remainder.



The new civil <a href="https://www.courtlistener.com/docket/66760250/1/mango-labs-llc-v-eisenberg/">lawsuit</a> implies the October vote was meaningless. Eisenberg’s lawyers disagree.



“Per the Settlement Agreement, Mr. Eisenberg transferred funds totaling approximately $67 million to Mango Markets,” his attorneys said. “Several weeks later, eligible Mango Markets’ members received reimbursement from the Mango Markets treasury.”



However, in its own lawsuit, Mango said Eisenberg schemed to protect his ill-gotten gains by forcing the protocol “under duress” to a settlement agreement.&nbsp;



Eisenberg’s attorneys argue the only explanation for the “improper three-month delay” is that Mango is attempting to take advantage of Eisenberg’s arrest.



He was arrested in Puerto Rico in December, after which <a href="https://blockworks.co/news/avi-eisenberg-committed-fraud">US prosecutors charged Eisenberg with commodities fraud</a> and market manipulation.



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Mango Markets Wants Eisenberg To Pay Up, His Lawyers Say the “Matter Was Settled”

Ben Strack

In the latest twist in the case against Avraham “Avi” Eisenberg, the CFTC has charged the former star DeFi trader.



Legal actions against Eisenberg, who, by his own admission, participated in an attack on DeFi exchange Mango Markets, are piling up.&nbsp;



Eisenberg was <a href="https://blockworks.co/news/avi-eisenberg-committed-fraud">charged</a> with commodities fraud and market manipulation by US prosecutors from the Southern District of New York last month. He was arrested in Puerto Rico on Dec. 26.



Now, the CFTC is going after civil monetary penalties and related relief, which could include trading bans, restitution, disgorgement and rescission, as well as pre- and post-judgment interest, according to a complaint <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.592057/gov.uscourts.nysd.592057.1.0_1.pdf" target="_blank" rel="noreferrer noopener">filed</a> Monday.



Eisenberg engaged in “a manipulative and deceptive scheme” leading to the misappropriation of more than $100 million from the platform, according to the complaint.



“The goal of [the] 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,” CFTC lawyers said in the complaint.



The <a href="https://blockworks.co/news/mango-markets-mangled-by-oracle-manipulation-for-112m">attack</a> on the Solana-based trading platform dates back to October. The exchange said at the time that the hacker was able to drain funds from its platform using a technique known as <a href="https://coinmarketcap.com/alexandria/glossary/oracle-manipulation" target="_blank" rel="noreferrer noopener">oracle price manipulation</a>.



The exploit sent the price of Mango’s native token MNGO <a href="https://blockworks.co/news/mango-markets-exploit-plot-revealed">plummeting</a> by about 50%. A <a href="https://app.realms.today/dao/DPiH3H3c7t47BMxqTxLsuPQpEC6Kne8GA9VXbxpnZxFE/proposal/2NGgwYnh5rV4igUwr4sBaeRCTzkyyJ64habEaPraRWZx" target="_blank" rel="noreferrer noopener">proposal to transfe</a><a href="https://app.realms.today/dao/DPiH3H3c7t47BMxqTxLsuPQpEC6Kne8GA9VXbxpnZxFE/proposal/GYhczJdNZAhG24dkkymWE9SUZv8xC4g8s9U8VF5Yprne">r</a> $42 million USDC to cover reimbursements for users was <a href="https://blockworks.co/news/mango-dao-readies-42m-to-make-users-whole">later passed</a> by Mango governance.&nbsp;



Eisenberg said in a series of <a href="https://twitter.com/avi_eisen/status/1581326197241180160" target="_blank" rel="noreferrer noopener">tweets</a> on Oct. 15 that he and his team used the protocol “as designed” — and believed their actions to be legal.&nbsp;



He could not immediately be reached for comment.&nbsp;



Ian Corp, an attorney with law firm Agentis, previously told Blockworks that the SEC and CFTC would have to prove Mango token was either a security or commodity to bring charges against Eisenberg.



The CFTC labels bitcoin, ether and tether as commodities in the legal document, alleging that Eisenberg used the artificially inflated value of his MNGO-USDC swaps to withdraw those commodities and other digital assets.



A court document <a href="https://blockworks.co/news/avi-eisenberg-confined-to-jail">issued</a> last week is set to keep Eisenberg behind bars under the custody of the US Attorney General.



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Avi Eisenberg Faces More Charges — This Time From the CFTC

Bessie Liu

Mango Markets attacker Avraham &#8220;Avi&#8221; Eisenberg has been charged with commodities fraud and market manipulation by US prosecutors from the Southern District of New York. He was arrested in Puerto Rico on Monday.



The complaint, which was made public on Tuesday, said Eisenberg willfully and knowingly attempted to manipulate and defraud markets, enabling him to withdraw millions in multiple cryptocurrencies with no intention of returning the stolen assets.



During the attack in October 2022, Eisenberg <a href="https://blockworks.co/news/mango-markets-mangled-by-oracle-manipulation-for-112m" target="_blank" rel="noreferrer noopener">drained $110 million from the Mango Markets exchange</a>, which the US Federal Prosecutor is now taking exception to, alleging that he manipulated the price of a commodity by taking both sides of the transaction.



At the time, Ian Corp, an attorney at the Agentis law firm, told Blockworks that “it’s possible that the SEC and/or CFTC bring civil charges against them, but they would have to also prove that the Mango token was either a security or commodity.” In the complaint, the Assistant US Attorney states that &#8220;Perpetuals are &#8216;swaps'&#8221; under the Commodity Exchange Act.



Eisenberg riled some observers when he declared his move &#8220;a highly profitable trading strategy&#8221; in a tweet at the time.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Statement on recent events: I was involved with a team that operated a highly profitable trading strategy last week.&mdash; Avraham Eisenberg (@avi_eisen) <a href="https://twitter.com/avi_eisen/status/1581326197241180160?ref_src=twsrc%5Etfw">October 15, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Mango Markets is a Solana based cryptocurrency trading platform, where Eisenberg used oracle price manipulation techniques to withdraw and estimated $53.7 million in USD Coin (USDC) and $3.2 million in tether (USDT) and SOL.&nbsp;



The attack sent the price of Mango’s native token MNGO <a href="https://blockworks.co/news/mango-markets-exploit-plot-revealed">plummeting </a>by 50% on the day to roughly $0.02, 95% below its all time high of $0.50 set in September 2021.&nbsp;



A <a href="https://app.realms.today/dao/DPiH3H3c7t47BMxqTxLsuPQpEC6Kne8GA9VXbxpnZxFE/proposal/2NGgwYnh5rV4igUwr4sBaeRCTzkyyJ64habEaPraRWZx">proposal to transfe</a><a href="https://app.realms.today/dao/DPiH3H3c7t47BMxqTxLsuPQpEC6Kne8GA9VXbxpnZxFE/proposal/GYhczJdNZAhG24dkkymWE9SUZv8xC4g8s9U8VF5Yprne">r</a> $42 million USDC to cover re-imbursements for its users was l<a href="https://blockworks.co/news/mango-dao-readies-42m-to-make-users-whole">ater passed </a>by Mango governance.&nbsp;



Mango is not the only exploit attempted by Eisenberg.&nbsp;



The hacker had also left DeFi lending giant Aave, in $<a href="https://blockworks.co/news/aave-curve-bad-debt">1.7 million bad debt</a>.&nbsp;



At the time, Eisenberg accumulated an estimated 92 million in token loan of Curve Finance’s native token, CRV over a period of six days, then rather than paying back the loan, he allowed a total o<a href="https://blockworks.co/news/curve-stablecoin-crv-loan">f $63.6 million in USDC collateral to be liquidated.</a>



The price of Aave dipped as bad debt accrued, but recovered fully once liquidation was complete, it’s team confirmed that the deficit could easily be covered with the protocol’s treasury holdings. And the Aave community quickly&nbsp; implemented short-term action to prevent further exploits.&nbsp;



Eisenberg&#8217;s exploits have been hotly debated in the crypto community, but the pseudonymous &#8216;swapman&#8217;, a co-admin of Whalepool.io. said that even if Eisenberg’s actions are “justifiable, and morally acceptable. If the intent is clearly to steal, then it is unethical.”



Avraham Eisenberg did not immediately return a request for comment.



Updated Dec. 27, 2022 at 18:49 ET: Additional context throughout.



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