Avraham Eisenberg Arrested for Manipulating DeFi Protocol Mango Markets

Avraham Eisenberg, who used "highly profitable trading strategies" to drain funds on decentralized finance (DeFi) protocol Mango Markets, was arrested in Puerto Rico on Monday.

It is reported that Eisenberg has been accused of manipulating the price of the perpetual contracts of MNGO, the native token on the DeFi platform, since October. By scalping between two accounts, he artificially inflated the price of the token by 1,300% in less than an hour. Eisenberg then used the token as collateral to borrow from Mango Markets and withdrew essentially all the cryptocurrency deposited on the protocol.

"Eisenberg engaged in a scheme involving the intentional and artificial manipulation of the price of perpetual futures contracts on a cryptocurrency exchange called Mango Markets, and other manipulative and deceptive devices and contrivances," according to a deposition signed by FBI Special Agent Brandon Racz.

Avraham Eisenberg earned $110 million in this manipulation, leaving Mango Markets insolvent.

After negotiations, Eisenberg agreed to return $67 million to the decentralized autonomous organization (DAO) that manages the protocol.

Mango Markets has since posted: "All mango depositors will be made whole," assuring that the protocol developer will not "pursue any criminal investigations or freezing of funds once the tokens are sent back."

Avraham Eisenberg is facing charges of commodities fraud and commodities manipulation, which would carry him to fines or jail time, according to a document released Tuesday. Eisenberg could also thus become the first U.S. resident to face charges for manipulating DeFi.

As of press time, the price of MNGO is $0.02 per, down 3.15% in the past 24 hours.