According to Bloomberg, in the first criminal trial in the United States involving cryptocurrency manipulation, trader Avraham Eisenberg, accused of exploiting a vulnerability in the Solana ecosystem decentralized finance platform Mango Markets to steal $110 million, was found guilty of fraud.
A federal jury in New York on Thursday (18th) convicted Avraham Eisenberg of commodity fraud, commodity manipulation, and wire fraud for his trading activities on October 11, 2022. Sentencing is scheduled for July 29. He faces 20 years in prison for wire fraud and 10 years for the other charges.
Prosecutors accused Eisenberg, who claimed to be an “applied game theorist,” of trading under a false identity on Mango Markets, artificially inflating the price of the Mango native token MNGO and perpetual futures contracts. He then used a platform feature that allowed him to “borrow” his held assets to withdraw $110 million worth of cryptocurrency, which he had no intention of repaying. Eisenberg later negotiated with Mango DAO and agreed to return $67 million.
Prosecutors stated that Eisenberg “pumped up” the price of the MNGO token to carry out his premeditated fraud on Mango Markets for several weeks, with the intention of “taking the money and running.” Following the verdict, Eisenberg’s lawyer, Brian Klein, stated in a release, “We are obviously disappointed, but we will continue to fight for our client. We plan to file a series of post-trial motions.”
Klein argued that his client executed a completely legal strategy, fully compliant with the smart contracts governing Mango Markets, which only warn users that the software is unaudited and used at their own risk. However, Assistant U.S. Attorney Thomas Burnett argued that the platform rules of Mango Markets could not shield Eisenberg from charges of fraud and manipulation.