Casey Wagner

Crypto trader Avraham Eisenberg was convicted on Thursday in relation to trades he made in October 2022 to extract more than $100 million from Mango Markets, according to a <a href="https://www.bloomberg.com/news/articles/2024-04-18/crypto-trader-convicted-in-110-million-haul-from-mango-markets?utm_campaign=socialflow-organic&amp;utm_source=twitter&amp;utm_medium=social&amp;utm_content=crypto">report</a> from Bloomberg.



28-year-old Eisenberg was charged with commodities fraud, wire fraud and commodities manipulation. The jury found him guilty of all three counts.



After closing arguments from the government and defense, the jury deliberated Wednesday afternoon and into Thursday before returning with their verdict. The trial lasted one week and took place just a few floors below where FTX founder Sam Bankman-Fried was sentenced last month.



Read more: <a href="https://blockworks.co/news/mango-markets-wants-eisenberg-to-pay">Mango Markets wants Eisenberg to pay up, his lawyers say the &#8216;matter was settled&#8217;</a>



Eisenberg was arrested in Puerto Rico in December 2022. Prosecutors say he illegally made off with $110 million after manipulating Mango Market futures contracts and pumping the price of swaps by 1,000%. He then borrowed against the contracts and boarded a flight from Puerto Rico to Israel. 



The government says he was fleeing because he committed a crime, but <a href="https://blockworks.co/tag/avraham-eisenberg">Eisenberg</a>’s defense team claims he was running after receiving numerous threats following his trades. 



“The more he pumped, the more he could steal,” government attorneys said Wednesday during their closing arguments. “It is clear as day the defendant knew” he was committing crimes, the prosecution added.&nbsp;



The defense’s case focused on the structure of decentralized exchange <a href="https://blockworks.co/tag/mango-markets">Mango Markets</a>, which, Eisenberg’s team says, allowed for the trades to take place. 



Read more: <a href="https://blockworks.co/news/avi-eisenberg-confined-to-jail">DeFi trader Avi Eisenberg is stuck in US custody. Here’s how he got there.</a>



Eisenberg employed a “successful, legal trading strategy,” defense attorney Brian Klein told the jury Wednesday.&nbsp;



His client was never asked to prove his identity, maintain collateral on the platform or complete a credit check, Klein said.&nbsp;



In the government’s rebuttal, assistant US attorney Thomas Burnett said that the defense was trying to distract from the government’s claims.&nbsp;



“The data and documents show he was borrowing. You should believe your own eyes,” he told the court.



This is a developing story.



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Crypto trader convicted in $110M Mango Markets fraud trial: Bloomberg

Shalini Nagarajan

Crypto-related hacks took a nosedive in the first quarter this year, new data from TRM Labs showed.



In a striking decline, about $400 million was pilfered in nearly 40 incidents, marking a 70% drop compared to the corresponding period in 2022.



A <a href="https://www.trmlabs.com/post/crypto-hacks-down-70-in-q1-2023" target="_blank" rel="noreferrer noopener">report</a> published on May 22 revealed that the average size of hacks dropped to $10.5 million from nearly $30 million in the same quarter a year ago. Meanwhile, hacking victims successfully recouped over half of the stolen funds during this period.



For instance, in March, a hacker discovered a <a href="https://tenderfi.medium.com/march-7-postmortem-170373e93cd1" target="_blank" rel="noreferrer noopener">bug in DeFi protocol Tender.fi&#8217;s code</a> and managed to snatch $1.5 million. But instead of running away with the loot, the hacker actually reached out to Tender.fi and struck a deal to return the money. The catch was a bug bounty worth 62.15 ether ($850,000)



TRM Labs said there is no single straightforward explanation for the decline in hacks, but two events may have dampened the enthusiasm of potential attackers.



In 2022, the top ten hacks reportedly accounted for about 75% of the total stolen funds. It’s important to note that quarterly numbers don&#8217;t accurately predict yearly losses.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1496" height="1285" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/05/trm-chart.jpg?w=1024&amp;h=1024" alt="" class="wp-image-56814" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/05/trm-chart.jpg?w=1496 1496w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/trm-chart.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/trm-chart.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/trm-chart.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/trm-chart.jpg?w=299 299w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/trm-chart.jpg?w=304 304w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/trm-chart.jpg?w=255 255w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/trm-chart.jpg?w=80 80w" sizes="(max-width: 1496px) 100vw, 1496px" /><figcaption class="wp-element-caption">Source: TRM Labs</figcaption></figure>



<h2 class="wp-block-heading">Eisenberg’s arrest in Mango Markets exploit</h2>



Crypto investor Avraham Eisenberg, who employed a &#8220;highly profitable trading strategy&#8221; to <a href="https://blockworks.co/news/mango-markets-mangled-by-oracle-manipulation-for-112m">siphon off over $110 million</a> worth of crypto from DeFi trading platform Mango Markets, was arrested in Puerto Rico in Dec. 2022.



Shortly after the incident occurred in mid-October, the self-proclaimed game theorist <a href="https://twitter.com/avi_eisen/status/1581326197241180160" target="_blank" rel="noreferrer noopener">openly admitted</a> to his role in depleting Mango Markets&#8217; funds.



Despite Eisenberg returning a portion of the funds, apparently in exchange for avoiding legal repercussions, the SEC didn&#8217;t let him off the hook. The agency <a href="https://www.sec.gov/news/press-release/2023-13" target="_blank" rel="noreferrer noopener">charged</a> him with breaking anti-fraud and market manipulation rules in securities laws.&nbsp;



On top of that, Mango Markets didn&#8217;t hold back either and <a href="https://blockworks.co/news/mango-markets-wants-eisenberg-to-pay">slapped Eisenberg with a lawsuit</a>, demanding $47 million in damages plus interest.



“Avraham’s prosecution may have signaled to would-be attackers that even an agreement from the victim not to pursue legal action may not confer protection,” TRM Labs said.



<h2 class="wp-block-heading">US Treasury’s sanctions against crypto mixer Tornado Cash</h2>



Decentralized crypto mixer Tornado Cash was <a href="https://blockworks.co/news/us-treasury-bans-citizens-from-using-mixing-service-tornado-cash">added to the US Treasury’s blocked list</a> last year. It was accused of facilitating the laundering of billions of dollars in virtual currency, including $455 million reportedly stolen by North Korean hackers.&nbsp;



As a consequence, the Treasury froze Tornado Cash&#8217;s US assets and prohibited American companies and individuals from conducting any business with them.



“The use of sanctions by the US government against crypto targets may have raised the potential costs of carrying out such attacks and made it more difficult to launder the proceeds,” TRM said.



However, the blockchain intelligence company said while crypto hacks have slowed down, the trend may only be temporary.



&#8220;The amount stolen and number of incidents in the first quarter of 2023 mirrors that of the third quarter of 2022. That was followed by a record-setting number of hacks that turned 2022 into a record year,&#8221; TRM added.



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Arrests and Sanctions Drove Lower Crypto Hacks in Q1

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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