- The fraud trial of Mango Markets’ exploiter Avraham Eisenberg has started in a New York federal court
- The trial is expected to last for two weeks
- Eisenberg had in the past said that his actions were legal
A New York federal court is set to decide whether Mango Markets exploiter Avraham Eisenberg committed a crime when he pocketed over $100 million from the DeFi platform. Eisenberg’s fraud trial opens today Tuesday 9 and is expected to last for two weeks. The court has already selected a 15-person jury that includes finance professors, a case that will determine whether the U.S. government is equipped to try financial crimes in the DeFi world.
A Highly Profitable Trading Strategy or Manipulation?
According to Eisenberg, the funds he pocketed were the fruits of his “highly profitable trading strategy.” Prosecutors, however, claim that the crypto trader manipulated the DeFi protocol for malicious gains.
On Monday 8, prosecution and defense teams hinted at focussing on the testimony of the protocol’s creator Dafydd Durairaj who is alleged to have contacted a ransomware negotiator immediately after the exploit.
The two sides also contemplated the word “manipulation” and what it means when used in Mango Markets’ documentation. They are also expected to scrutinize the protocol’s terms of service to ascertain what constitutes legal and illegal behavior when using the platform.
Although the U.S. government has tried crypto-related cases like the Sam Bankman-Fried case and the upcoming Terraform Labs case, Eisenberg’s case is the first to directly explore the intersection between the DeFi sector and U.S. laws.
Market Manipulation or Theft?
Eisenberg’s trial starts 18 months after the crypto trader exploited the platform in October 2022. However, he later returned a section of the funds after the protocol said it wouldn’t involve law enforcement agencies, a promise they failed to keep.
The trader was arrested roughly two months after the exploit and the country’s futures watchdog CFTC accused him of market manipulation while the securities regulator SEC charged him with stealing crypto.
With Eisenberg maintaining that his actions were legal, it’s to be seen what will happen if the court finds out that he operated within the Mango Markets’ terms of service.
