Crypto Trader Charged With Mango Markets Price Manipulation

A crypto trader has been charged with fraud related to the Mango Markets exchange.

Avraham Eisenberg was arrested in Puerto Rico and charged by the U.S. Attorney’s Office in Manhattan with commodities fraud and manipulation, Bloomberg reported Tuesday (Dec. 27).

The complaint alleges that Eisenberg manipulated the price of Mango perpetual swaps by using two Mango accounts he controlled, thereby driving up the price of the swaps by 1,300% in 20 minutes before using his swaps to borrow and withdraw $110 million worth of cryptocurrencies from the exchange, according to the report.

“Due to Eisenberg’s withdrawals, other investors with deposits on Mango Markets lost much, or all, of those deposits,” the complaint said.

The technique used for manipulating the price at Mango was also used by others to take $34 million from Harvest Finance in 2020, $182 million from Beanstalk in April and $9 million from Moola Market in October, according to the report.

As PYMNTS reported at the time of the Mango Markets event, the exploit first came to light by blockchain auditing firm OtterSec in a Twitter post on Oct. 11 and was confirmed on the social media site by Mango, who tweeted that the “parties have indicated a willingness to communicate.”

Mango said on Twitter on Oct. 12 that its priorities included preventing further losses, ensuring Mango depositors are made whole, and trying to “salvage some value in Mango DAO and protocol to rebuild from here.”

OtterSec’s Robert Chen told CoinDesk at that time that in the fraud: “It’s like a lending-borrowing race: if you have overvalued collateral, you can then borrow against that collateral, and that’s what they did.”

At the time of the Mango Markets incident, CoinDesk reported that ex-FBI agent Chris Tarbell said that it was “more of a market manipulation” instead of a hack.

Tarbell said at the time that as there was no centralized entity in place, the opportunity was ripe for the taking. He added that the crypto industry needs to “clean itself up” and that regulators were likely to step in even if crypto doesn’t want the regulators to do so, according to the report.

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