- A Manhattan jury has convicted crypto trader Avraham Eisenberg of fraud and market manipulation for his $110 million heist from Mango Markets
- Eisenberg, arrested in Puerto Rico in December 2022, faced charges of commodities fraud, commodities manipulation, and wire fraud
- Eisenberg could receive up to 20 years in federal prison for his crimes
A Manhattan jury has found crypto trader Avraham Eisenberg guilty of fraud and market manipulation for orchestrating a $110 million heist from decentralized finance protocol Mango Markets in October 2022. Eisenberg, who was arrested in Puerto Rico in December 2022, faced charges of commodities fraud, commodities manipulation, and wire fraud for his scheme. He is scheduled to be sentenced on July 29 by New York District Court Judge Arun Subramanian and could face up to 20 years in federal prison for his crimes.
Jury Rules That Eisenberg Stole Rather Than Borrowed
Eisenberg’s scheme involved executing three massive MNGO perpetual futures trades, artificially inflating the price over 1,000%, and exploiting the protocol to “borrow” $110 million in various cryptocurrencies. Instead of genuine borrowing, Eisenberg effectively stole the funds; after the exploit, he anonymously proposed to return $67 million in exchange for immunity from prosecution and permission to keep the rest.
Eisenberg’s defense team that Eisenberg’s actions were lawful, but prosecutors presented evidence to the contrary which included searches for terms such as “statute of limitations market manipulation” and “FBI surveillance,” as well as referring to Eisenberg’s attempt to flee to Israel after his identity as the exploiter was revealed.
His team also argued that his trades on Mango Markets were “successful and legal,” contending that they “fully complied” with the decentralized protocol’s rules at the time of the heist. However, the jury sided with prosecutors, characterizing Eisenberg’s actions as “brazen” fraud and manipulation and setting him up for a lengthy spell in prison.
Smart Contract Crimes in the Spotlight
Damian Williams, the U.S. Attorney for the Southern District of New York, emphasized the significance of the prosecution in protecting financial markets in a press release on Thursday:
This ground-breaking prosecution epitomizes this office’s ability to employ innovative methods and cutting-edge law enforcement tools to continue to protect all financial markets.
Eisenberg’s guilty verdict is something of a watershed moment in the crypto world, showing that manipulation of a smart contract algorithm counts as fraud, coming just days after Shakeeb Ahmed became the first person to be jailed for exploitation of a smart contract.
