Avraham “Avi” Eisenberg, who is accused of exploiting the Solana decentralized exchange Mango Markets for $110 million, is being compared to a scam artist selling fake diamond rings, according to prosecutors. United States Assistant Attorney Tian Huang stated in court that Eisenberg’s actions on October 11, 2022, were fraudulent and manipulated the market. Huang claimed that Eisenberg inflated the price of cryptocurrency by 1,000% in just 20 minutes and deceived Mango Markets into thinking he owned a large amount. Huang further alleged that Eisenberg stole over $110 million of cryptocurrency, rather than borrowing it as he claimed.
Eisenberg, on the other hand, denies the allegations and argues that he operated a profitable trading strategy that was within the bounds of the law. His lawyer, Sanford Talkin, argued that Eisenberg risked $13 million of his own funds and could have lost it all if the trade failed. Talkin emphasized that Eisenberg’s actions were transparent and visible to anyone, and that the exploit occurred in a public manner on the blockchain, allowing anyone to trade against him if they had chosen to do so.
In October 2022, Eisenberg artificially increased the value of Mango Markets’ native token, MNGO, in relation to USD Coin (USDC). He then used this inflated price to obtain loans, depleting Mango Markets’ treasury of approximately $110 million worth of various cryptocurrencies. Though some of the funds were later returned, Mango Markets filed a lawsuit against Eisenberg seeking $47 million in damages plus interest.
Crypto lawyer Gabriel Shapiro believes that the outcome of Eisenberg’s case could have significant implications for the crypto industry. He agrees with the charge that Eisenberg engaged in market manipulation but disagrees with the claim that he violated loan agreements implied by his use of the protocol. Shapiro argues that this interpretation is not consistent with how decentralized finance (DeFi) works. He uses the example of a user getting liquidated on Aave due to the price of their collateral falling, and questions whether AaveDAO should be able to sue the user to collect the debt.
In related news, a group of “white hat” hackers called the “SEAL 911” team has been formed to combat crypto hacks in real time. This development could play a significant role in preventing future cyber attacks on the crypto industry.