US Man Charged in $110m Crypto Trading Scheme
A US man could face a maximum jail term of 40 years after being charged with fraudulently obtaining $110m of cryptocurrency from crypto exchange Mango Markets and its customers.
Avraham Eisenberg, 27, was living in Puerto Rico when he carried out the alleged scheme, according to the Department of Justice (DoJ).
He’s now been charged with one count of commodities fraud, one count of commodities manipulation and one count of wire fraud. The charges follow a filing from Mango Markets itself last month. The firm reportedly wants $47m in damages plus interest starting from the time of the attack.
Mango Markets is run by the Mango Decentralized Autonomous Organization (DAO), which has its own crypto token (MNGO) that investors can buy and sell.
Eisenberg is accused of manipulating the price of perpetuals contracts for MNGO. Perpetuals are a type of futures contract popular in crypto markets.
He did this by selling huge amounts of MNGO perpetuals contracts to himself, thereby rapidly inflating the price of those contracts by a reported 1300% in under an hour.
Eisenberg then allegedly used the increased value of his MNGO perpetual futures position to borrow and withdraw approximately $110m in various crypto assets from Mango Markets, effectively draining the platform of all its assets.
“As alleged, Avraham Eisenberg manipulated the Mango Markets cryptocurrency exchange in order to obtain over $100m in illicit profits for himself,” said US attorney Damian Williams for the Southern District of New York.
“Through his scheme, Eisenberg left others holding the bag. Market manipulation is illegal in all of its forms, and this office is committed to prosecuting such schemes wherever they occur – including the cryptocurrency markets.”
In addition to the criminal charges filed against him, Eisenberg is facing an SEC complaint regarding his alleged violation of securities laws. The regulator is seeking civil penalties alongside “permanent injunctive relief,” “a conduct-based injunction” and “disgorgement with prejudgment interest.”
