US accuses cryptocurrency manipulator Mango of fraud

US accuses cryptocurrency manipulator Mango of fraud

Avraham Eisenberg’s trading in futures contracts tied to Mango’s MNGO crypto token allowed him to withdraw $110 million in cryptocurrencies from other investors’ deposits, according to a complaint made public Tuesday in Manhattan federal court, with no apparent intention. to repay the funds.

Eisenberg could not immediately be reached for comment, and it is unclear if he has an attorney.

Mango is a decentralized cryptocurrency exchange operated by Mango DAO that allows investors to lend, borrow, trade and use leverage to change assets into cryptocurrencies.

The Dec. 23 complaint signed by FBI Special Agent Brandon Racz says Eisenberg used two accounts on Oct. 11 to simultaneously buy and sell futures contracts based on the relative values ​​of MNGO and the stablecoin USD Coin (USDC).

As both sides of the transaction, Eisenberg artificially inflated the price of MNGO against the USDC, allowing him to borrow and then withdraw $110 million in various cryptocurrencies, according to the complaint.

Mango quickly entered into negotiations with Eisenberg and reached an agreement to collect $67 million.

“All Mango depositors will be unharmed,” with token holders voting for the settlement agreeing not to “pursue any criminal investigations or freezing of funds once the tokens are returned,” a community post read at the time.

Eisenberg claimed responsibility for the exchange, according to the complaint, and tweeted on Oct. 15 that “the exchange on which this took place, Mango Markets, has become insolvent.”

He also tweeted: “I believe all of our actions were legal open market actions, using the protocol as it was designed, even though the development team did not fully anticipate all of the consequences of the definition. parameters as they are.”

Mango could not immediately be reached for comment. U.S. Attorney Damian Williams Manhattan’s office did not immediately respond to a request for comment.

The case is US v. Eisenberg, US District Court, Southern District of New York, No. 22-mj-10337.