The US Securities and Exchange Commission (SEC) apprehended DeFi trader Avraham Eisenberg for staging an attack on Mango Market by manipulating platforms’ native tokens and extracting $116 million in crypto assets.
According to the SEC, Mango (MNGO) is a security and is a governance token. MNGO permits holders to vote on the platform operations.
According to an official press release of the SEC, Eisenberg, a 27 year-old U.S. citizen who was arrested and detained at MDC Guaynabo, Puerto Rico, is awaiting transport to appear before the Southern District of New York where he is facing parallel criminal and civil charges, by the Department of Justice and the Commodities Futures Trading Commission (CFTC), respectively.
Mango markets is a Solana-based platform used for spot margin trading. Perpetual futures are traded on Mango Markets own order book. Mango market is regulated by Mango DAO. It took the Mango market treasury down to a negative of -$116.7 million.
As per the SEC complaint dated October 11, 2022, the DeFi trader stole around $116 million of crypto assets from Mango Market platform.
The complaint states that Eisenberg, who executed the scheme while residing in Puerto Rico, “used an account that he controlled on Mango Markets to sell a huge quantity of perpetual futures for MNGO tokens and used a different account on Mango Markets to buy those same perpetual futures.”
The complaint adds that Eisenberg then got involved in a series of massive purchases of the thinly traded MNGO token to artificially raise the price of the MNGO token relative to the crypto asset USD Coin.
The complaint notes that as a result of these transactions, the price of MNGO perpetual futures on Mango Markets, including those held by Eisenberg, increased.
SEC notes that Eisenberg used the increased value of his MNGO perpetual futures position to borrow and withdraw approximately $116 million worth of various crypto assets from Mango Markets, effectively draining all available assets from the Mango Markets platform.
David Hirsch, Chief of the Crypto Assets and Cyber Unit at the SEC said that “As we allege, Eisenberg engaged in a manipulative and deceptive scheme to artificially inflate the price of the MNGO token, which was purchased and sold as a crypto asset security, in order to borrow and then withdraw nearly all available assets from Mango Markets, which left the platform at a deficit when the security price returned to its pre-manipulation level.”
“As our action shows, the SEC remains committed to rooting out market manipulation, regardless of the type of security involved,” Hirsch added.
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Source: https://www.thecoinrepublic.com/2023/01/23/mango-market-manipulator-apprehended-by-sec/