The US Commodity Futures Trading Commission (CFTC) has charged Avraham Eisenberg with fraud and market manipulation to illicitly obtain more than $110 million as a result of the attack on the Mango Markets DeFi platform.
NEWS: Today, the CFTC charged Avraham Eisenberg with a manipulative and deceptive scheme to misappropriate more than $110 million from Mango Markets, a digital asset exchange. Read the details: https://t.co/Rj5FKu5hgn
— CFTC (@CFTC) January 10, 2023
The regulator filed a civil complaint in the Southern District of New York.
The CFTC alleges that to execute his scheme Eisenberg created two anonymous accounts on Mango Markets. He used the accounts to open two large leveraged positions in a swap contract, the value of which is based on the ratio of the price of the platform’s native token MNGO and USDC.
He then artificially “pumped” the Mango Markets token price. To do this, he bought a “significant amount” of the asset on three exchanges. The venues supplied data for the price oracles used by the DeFi platform to determine the value of the swap positions.
As a result of Eisenberg’s manipulations, the price of MNGO surged more than thirteenfold within half an hour. Using the inflated value of his swaps as collateral, he borrowed against them and withdrew digital assets worth more than $110 million.
Subsequently Eisenberg returned to the platform approximately $67 million of the misappropriated funds, in an attempt to avoid accountability. However, the regulator noted, digital assets worth about $47 million he kept for himself.
In the complaint, the Commission sought, among other remedies, civil penalties, disgorgement of ill-gotten gains, and the recovery of litigation costs.
“This is the CFTC’s first enforcement action involving a fraudulent and manipulative scheme on a DeFi platform. And the first related to what is sometimes called ‘oracle manipulation’,” the statement said.
In December the U.S. Department of Justice arrested Eisenberg in Puerto Rico. Prosecutors charged him with commodities fraud and price manipulation.
According to a statement by CFTC Commissioner Kristin Johnson, the investigation into the defendant’s actions is being led by the U.S. Securities and Exchange Commission.
Today @CFTCjohnson released a statement regarding the CFTC action against a market manipulation scheme in the digital assets markets. https://t.co/oArsnrc3ME
— CFTC (@CFTC) January 10, 2023
Beosin specialists estimated that in 2022 the Web3 industry suffered about $3.6 billion in damages from 167 attacks, Beosin researchers calculated.
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