A cryptocurrency trader accused of rigging the Mango Markets exchange and attempting to steal $110 million was arrested in Puerto Rico and charged with fraud by prosecutors in New York.
Avraham Eisenberg allegedly used two Mango Markets accounts he controlled to manipulate the price of Mango perpetual swaps, which are futures that allow traders to keep positions open. All he needed was 20 minutes to push up the price of the swaps by 1,300%, according to a criminal complaint unsealed Tuesday.
Eisenberg used his swaps, which had increased in value, to borrow, then withdraw, about $110 million worth of various cryptocurrencies which came from the deposits of other investors on the exchange, according to the complaint.
“Due to Eisenberg’s withdrawals, other investors with deposits on Mango Markets lost much, or all, of those deposits,” the complaint says.
Eisenberg later agreed to return $67 million to Mango, according to the complaint.
Transgressors and other hardcore crypto enthusiasts consider these manoeuvres, as Eisenberg wrote on Twitter, “a profitable trading strategy.” That’s leading industry participants to call for greater regulatory clarity to quash the practice, which risks further eroding investor confidence as the blockchain sector contends with a steep market downturn. Others are calling it outright financial manipulation.
The technique used by the Mango exploiter has been tied to other high-profile attacks. Harvest Finance lost $34 million in 2020, while Beanstalk was hit for $182 million in April. In October, the decentralized credit platform Moola Market suffered a $9 million exploit.
The US Attorney’s Office in Manhattan charged Eisenberg with commodities fraud and manipulation. Eisenberg was expected to appear in court later Tuesday. He didn’t have a lawyer listed in the court filings.
© 2022 Bloomberg L.P.