On Monday, the United States Commodity Futures Trading Commission (CFTC) filed charges against self-proclaimed “applied game theorist” Avraham Eisenberg, accusing him of market manipulation of DeFi platform Mango Markets and exploiting more than $100 million worth of digital assets.
According to the case document, Eisenberg’s objective was “to artificially inflate the value of his swap contract holdings on Mango Markets through price manipulation, so that he could “borrow” a significant amount of digital assets that he had no intention to repay.”
“Defendant accomplished this scheme by manipulating the price of MNGO and, ultimately, the price of MNGO-USDC Swaps, through a type of scheme often referred to as ‘oracle manipulation.’”
Per the filing, Eisenberg, who exploited Mango Markets on Oct. 11, created two accounts in the platform and funded each with $5 million.
Using one account, he created a $19 million long position with over 400 million MNGO/USDC Swaps. On the second account, he created a $19 million short position with the same number of Swaps.
“In this way, Defendant placed himself on both sides of the same transaction, which effectively resulted in a ‘wash’ transaction,” the filing reads.
Eisenberg, who even documented the process on his Twitter, was caught in Puerto Rico and arrested by the U.S. Department of Justice on Dec. 17 despite claiming that his actions were part of legal open market operations.
After the exploit, the hacker had also anonymously demanded $70M worth of bounty. Later, Mango Markets DAO had agreed to approve a $47M settlement with Eisenberg.
The CFTC is now seeking restitution of funds and a ban on trading for committing fraud and violating the Commodity Exchange Act.
As things stand, the DeFi community might be forgiving, but the United States law enforcement authorities is definitely not.