A federal jury in New York yesterday (Thursday) convicted crypto trader Avraham ‘Avi’ Eisenberg of fraud and market manipulation for allegedly stealing $110 million from decentralized cryptocurrency exchange Mango Markets. This was the first conviction in a cryptocurrency market manipulation case.
Jail time ahead
He now faces substantial prison terms: the securities fraud and securities manipulation counts against him each carry a maximum of 10 years in prison, while the wire fraud count carries a maximum sentence of 20 years. He will be sentenced on July 29.
“This ground-breaking prosecution is a testament to this office’s ability to use innovative methods and sophisticated law enforcement tools to protect all financial markets,” said US Attorney Damian Williams.
$110 million stolen
In October 2022, Eisenberg used two accounts to sell large amounts of perpetual contracts from one account to another account of the mango crypto token MNGO, thereby inflating the price by 1,300 percent within an hour. He then used the token as collateral to borrow $110 million in other cryptocurrencies from Mango Markets and quickly withdrew the funds. By doing so, he essentially withdrew all cryptocurrencies deposited on the DeFi platform.
Later, they settled with Mango Markets and agreed to return $67 million to the decentralized autonomous organization that runs the protocol. He was arrested in Puerto Rico in December 2022.
In court, defense attorneys tried to convince the jury that Eisenberg’s dealings in the mango market were “successful and legal” and “fully compliant” with the decentralized protocol’s meager rules. However, the jury sided with the plaintiff’s portrayal as “definite” fraud and manipulation.
The US Commodity Futures Trading Commission also brought civil fraud and market manipulation charges against Eisenberg.
“Manipulative trading puts our financial markets and investors at risk,” said Principal Deputy Assistant Attorney General, Nicole Argentieri. “This indictment, the first action involving the manipulation of cryptocurrencies through open market transactions, demonstrates the Criminal Division’s commitment to protecting US financial markets and holding accountable wrongdoers, regardless of the mechanisms used to manipulate and defraud.”
This article is written by Arnab Shome at www.financemagnates.com.