Avraham Eisenberg, the crypto investor whose “highly profitable trading strategy” drained DeFi trading platform Mango Markets of crypto worth $110 million, was arrested Monday in Puerto Rico, court documents said.
The self-described game theorist admitted his role in draining Mango Markets’ treasury shortly after the incident in mid-October, and may now be the first U.S. resident to face charges for his role in manipulating a decentralized finance (DeFi) trading platform.
Eisenberg faces charges of commodities fraud and commodities manipulation, according to a filing unsealed Tuesday. The charges could see punishments ranging from fines to prison time.
A deposition signed by FBI Special Agent Brandon Racz alleges Eisenberg “willfully and knowingly” manipulated the sale of a commodity – namely futures contracts on Mango Markets.
“Eisenberg engaged in a scheme involving the intentional and artificial manipulation of the price of perpetual futures contracts on a cryptocurrency exchange called Mango Markets, and other manipulative and deceptive devices and contrivances.”
Eisenberg was arrested Monday night in Puerto Rico, said a second filing signed by Assistant U.S. Attorney Thomas Burnett.
According to the unsealed complaint, Eisenberg manipulated the price of perpetuals contracts (a type of futures contract popular in crypto markets) for Mango Markets’ native token MNGO. He sold massive amounts of MNGO perpetuals contracts to himself, thus pumping the price of those contracts 1,300% in under an hour.
Up big time, Eisenberg then borrowed against the value of his position and “withdrew essentially all of the cryptocurrency deposits on the Mango Markets platform.” He made $110 million, according to the complaint.
The platform became “insolvent” as a result, the deposition said, quoting Eisenberg’s own Twitter account.
In the wake of the trade Eisenberg negotiated with Mango Markets and agreed to return $67 million to the decentralized autonomous organization (DAO) governing it. Mango DAO planned to return those funds to users impacted by Eisenberg’s attack.
News of Eisenberg’s arrest sparked celebratory memes in Mango Markets’ Discord server.