Mango Markets Hacker’s Plan To Short CRV Backfires

A crypto trader responsible for the Mango Markets exploit has seen his short position liquidated, thanks to a series of wild price swings in the CRV price. 

The trader, identified as Avraham Eisenberg, gained notoriety when he described the Mango Markets hack as a “very profitable trading strategy.” 

A War On Curve 

On-chain watchers noticed on Tuesday that Eisenberg had borrowed 88 million CRV tokens from lending protocol Aave and sold them in the market over the past week. The pressure generated by this event saw the price of CRV drop to $0.40, enabling him to borrow further CRV from Aave’s Curve pool. Market watchers speculated that Eisenberg was targeting Michael Egorov, Curve founder, with his short-selling strategy. 

Egorov holds several loans on Aave, backed by CRV as collateral, and a liquidation price set at $0.25. If the CRV price reached this level, it would trigger Aave’s liquidation contract, selling Egorov’s CRV to the market and pushing the price even lower.

Other Whales Step In 

Other whales caught wind of Eisenberg’s attack on Curve and Egorov and began opening long positions to increase the CRV price and shore up the token’s value. Andrew Kang, a member of PleasrDAO, tweeted, 

“First, he came for Mango, and I did not speak out. Now, he tries to hunt the loan of one of the godfathers of DeFi, and that’s when the foot is put down to defend.”

As a result of these long positions, Curve’s price gradually increased. 

Short Position Liquidated 

With the CRV price increasing as a result of the long positions opened by other whales, CRV eventually hit Eisenberg’s liquidation level, which was set at just above $0.60. When the price hit this point, Aave’s liquidation mechanism began liquidating the USDC, which he had put up as collateral to buy back the CRV tokens from the market and pay off the debt.

However, the liquidation was cut short as others who had gone long began taking profits at this level. At the time of writing, Eisenberg’s position had started liquidating again, with the CRV price at $0.61. 

A Loss for Eisenberg? 

Many marked this episode as a loss for Eisenberg. However, others remained skeptical, speculating that he was attempting to put the market in a false sense of security before revealing his plan. Others have speculated that he could be maintaining a larger off-chain position on CRV and intended for his Aave loan to be liquidated all along. Some market watchers maintain that Eisenberg is just biding his time before taking another crack at the $0.25 liquidation price. 

A more controversial theory is that Egorov and Eisenberg planned the entire thing to generate interest in the Curve protocol. This is due to the timing of Egorov publishing the code for Curve’s upcoming stablecoin on GitHub earlier in the day. 

The Mango Markets Hack 

Eisenberg was revealed to be the one who engineered the Mango Markets hack, using price manipulation strategies to drain the Solana-based protocol of $100 million. He then cut a deal with the Mango Market’s team and returned half of the stolen funds to cover user losses. He called the exploit a “highly profitable trading strategy,” prompting a furious backlash from the DeFi community, who criticized his actions and their negative implications for the ecosystem.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.