Trial Begins for Alleged Mango Markets Attacker in the US

On April 9th, a federal court in New York commenced proceedings against Avraham Eisenberg, suspected of orchestrating an attack on the DeFi project Mango Markets in 2022, resulting in the extraction of digital assets worth $116 million.

The trial was initially scheduled for December 4, 2023, but was postponed at the defense’s request.

Eisenberg was arrested in Puerto Rico in 2022. Subsequently, the CFTC and the SEC charged him with fraud and market manipulation for illicit enrichment.

The defendant admitted that his team orchestrated a coordinated attack on Mango. However, he claimed the actions were legal, describing them as a “highly profitable trading strategy” that exploited available protocol advantages.

In practice, Eisenberg “inflated” the platform’s native token, MNGO, by manipulating the price oracle and using the coins as collateral to secure loans amounting to approximately $116 million. These actions rendered the DeFi project insolvent.

Later, the trader reached an agreement with the Mango DAO to return $67 million of the extracted funds, and the developers announced their readiness to relaunch the protocol.

The Essence of the Trial

Eisenberg is accused of unlawfully manipulating Mango Markets’ futures contracts, reports CoinDesk. The court has already selected 15 jurors to hear the case.

The proceedings began with prosecutors reflecting on how Mango founder Dafydd Durairaja communicated with the accused regarding the return of funds. They claimed the platform’s head was not negotiating on equal terms but was caught in a “hostage situation.” They accused Eisenberg of extortion.

Judge Arun Subramanian partially sided with the defense team and advised government representatives not to raise this issue during the main hearings.

The parties also debated the term “manipulation,” its potential use by witnesses, and its presence in Mango’s terms of service. Additionally, there were disagreements regarding the “duties” of traders when trading on crypto platforms.

This case will be the first precedent in the US where a trader is accused of malicious interaction with a DeFi protocol.

In February 2023, the rating agency Moody’s concluded that the trial of Eisenberg would have a positive impact on the DeFi sector.