The American Securities and Exchange Commission (SEC) has charged Avraham Eisenberg with fraud and market manipulation. Eisenberg is also facing charges from the US Justice Department and the CFTC.
Eisenberg is responsible for the Mango Markets hack, stealing $116 million worth of crypto assets from the platform.
Mango Markets Hacker Charged By SEC
Avraham Eisenberg, the attacker behind the Mango Markets hack, was charged today by the United States Securities and Exchange Commission (SEC). The SEC charged Eisenberg with offenses related to fraud and market manipulation connected with the hack, which took place in October 2022. Eisenberg, a United States citizen, was arrested in Puerto Rico in December and will be moved to New York to face the litany of civil and criminal charges against him.
Eisenberg is alleged to have manipulated the platform’s market and token, resulting in the loss of approximately $116 million worth of crypto assets. Heisenberg boasted about the Mango Markets hack in a Twitter thread, describing the hack as a highly profitable trading strategy. As a result of the hack, Mango Markets was rendered insolvent as a result of the hack, which Eisenberg and a team of users executed. During an appearance on the Unchained Podcast, Eisenberg defended his actions, calling them legal market actions that utilized the protocol as designed.
“I was involved with a team that operated a highly profitable trading strategy last week. I believe all of our actions were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are.”
Charges Brought Against Eisenberg
Eisenberg has already been charged by the US Department of Justice and the Commodity and Futures Trading Commission (CFTC). According to the SEC, Eisenberg has violated several federal securities laws provisions, including some anti-fraud and anti-market manipulation provisions. The SEC also stated that it viewed the Mango Markets governance token, the MNGO, as security, something a lot of people in the crypto ecosystem would dispute.
The SEC, under current chair Gary Gensler, has increased scrutiny on the crypto space and has often highlighted that it views all crypto assets as securities. The SEC’s chief of crypto assets and cyber unit, David Hirsch, stated in a press release,
“As our action shows, the SEC remains committed to rooting out market manipulation, regardless of the type of security involved.”
Other charges brought against Eisenberg by the SEC are similar to the ones brought in by the Department of Justice and the Commodity and Futures Trading Commission. The DOJ has charged Eisenberg with market manipulation, including commodities fraud and manipulation. On the other hand, the CFTC has charged him with commodities fraud and manipulation, which also includes several violations of the Commodity Exchange Act. The press release explained,
“As we allege, Eisenberg engaged in a manipulative and deceptive scheme to artificially inflate the price of the MNGO token, which was purchased and sold as a crypto asset security, in order to borrow and then withdraw nearly all available assets from Mango Markets.”
The Mango Markets Hack
The Mango Markets hack took place in October, with Eisenberg targeting the native MNGO token and artificially inflating its price. He then took several loans, managing to drain the Mango Markets treasury for $110 million. He then tried to use the stolen MNGO governance tokens to manipulate the protocol’s DAO to vote for his solution to return the tokens, following which the DAO offered Eisenberg a deal that let him keep $47 million worth of crypto assets as a bounty if he returned the rest of the assets.
The SEC alleged that the Mango Markets hack was orchestrated from Puerto Rico, following which Eisenberg disappeared for some time before reappearing in the United States. Eisenberg had attempted to execute a similar attack on Aave in November. However, that attempt failed, with the hacker losing millions worth of crypto.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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