Avraham Eisenberg, who admitted to draining the decentralized finance (DeFi) protocol Mango Markets with his "highly profitable trading strategy," has been detained by the US prosecutors.
For attempting to manipulate a decentralized market, US authorities had already made their first arrest. Avraham Eisenberg, who admitted to draining the decentralized finance (DeFi) protocol Mango Markets with his "highly profitable trading strategy," has been detained by the US prosecutors.
The manipulator of the DeFi Protocol Mango Market detained
He was detained in Puerto Rico on Monday, according to court documents. He reached an agreement with Mango Markets by returning $67 million. At the beginning of October, Eisenberg tampered with the DeFi protocol.
He used two accounts to artificially skyrocket the price of Mango's cryptocurrency MNGO by 1,300 percent in less than an hour. He sold many perpetual contracts from one of his accounts to the other.
Then, he quickly withdrew the $110 million he borrowed from Mango Markets by using the token as collateral for a cryptocurrency loan. He essentially withdrew all of the cryptocurrencies that had been deposited on the DeFi platform by doing this.
FBI Special Agent Brandon Racz wrote in his deposition that Eisenberg engaged in a scheme involving the artificial and intentional manipulation of the price of perpetual futures contracts.
This was via a cryptocurrency exchange known as Mango Markets and other manipulative, deceptive devices and contrivances.
A Compromise with Mango Markets
In addition, he only acknowledged his role in draining the DeFi protocol after a week of manipulation. But he thought his conduct was "legal" in the open markets.
He even mentioned how his actions rendered Mango Markets bankrupt, preventing customers from using their money. He later settled with Mango Markets. He consented to pay back $67 million to the DAO that oversees the protocol.
After the settlement, Mango Markets announced in a community post that all mango depositors would be made whole. It also stated that the protocol developers would "not pursue any criminal investigations or freezing of funds once the tokens are sent back."
Eisenberg is currently accused of manipulating and defrauding the commodities market. She could be sentenced to jail time and pay a fine if found guilty. It is the first time US law enforcement has taken legal action against someone for abusing the DeFi protocol.