On Monday, charges were filed by the Commodity Futures Trading Commission (CFTC) against Avraham Eisenberg of manipulating the decentralized exchange named Mango Markets and stealing digital assets worth $110 million.
Last week, Eisenberg had also been charged by the Department of Justice (DOJ) for the hack that occurred on October 11th, 2022.
The CFTC
The filing from the CFTC dictated that the scheme orchestrated by the defendant was aimed at artificially inflating his swap contract holdings’ value via price manipulation on the Mango Markets platform.
It said that Eisenberg had done so for ‘borrowing’ a substantial amount of digital assets, which he had no intention of repaying.
Mango Markets is a decentralized exchange (DEX) based on the Solana blockchain and a DAO governs it. This comprises of holders of its MNGO token that allow investors to borrow, lend and swap crypto, or trade it via leverage.
The Solana exchange was hacked on October 11 last year and funds of about $110 million were compromised.
Mango Markets had disclosed that the price oracle of the platform had been manipulated by the hacker to achieve their goal.
The arrest
Eisenberg had been arrested by the US Department of Justice back in December 2022 for his involvement in the Mango Markets hack.
He admitted his involvement on Twitter and referred to the maneuver as a profitable trading strategy. He has now been charged with market manipulation, fraud, and violation of the Commodity Exchange Act by the CFTC.
The regulator also asserted that they intend to ask for restitution of funds, and monetary penalties and also ban Eisenberg from trading digital asset commodities.
The agency’s filing showed that two anonymous accounts had been created by Eisenberg at Mango Markets just before the hacking incident in October.
He had funded both accounts with USDC worth $5 million. He had used one account for establishing a long position via leverage of about $19 million.
This included 400 million swaps of MNGO/USDC at $0.04. He then used the second account for setting up short positions of the same number of swaps worth $19 million.
The agency said that Eisenberg had put himself on both sides of the transaction in this way, which means it was a ‘wash’.
The hack
Since no identifying information is needed for operating an account on Mango Markets, Eisenberg had no issue in creating the anonymous accounts.
This enabled him to conceal that he was operating both transactions. A bug bounty worth $47 million had been offered to the Mango Market hacker by the Mango DAO after the attack.
They also promised that no charges would be pressed if funds worth $67 million would be returned. While Eisenberg had agreed to the terms publicly, it remains unclear if the tokens were returned or not.
While the community and the Mango Markets DAO may forgive him, the same does not apply to law enforcement agencies in the United States.
The CFTC attorneys have demanded a trial in the filing for Eisenberg and others who may have been involved in the hack.