Avraham 'Avi' Eisenberg convicted for $110 million Mango Markets exploit: report

Avraham 'Avi' Eisenberg was convicted on fraud charges related to the over $110 million exploit of the digital asset platform Mango Markets, reports Bloomberg. 

In New York, a federal jury found Eisenberg guilty of commodities fraud, commodities manipulation and wire fraud related to the exploit, the publication adds. 

This story is developing and will be updated.

What happened

Eisenberg's trial began on April 9 and lasted a little more than a week.

Eisenberg was arrested in December 2022 in Puerto Rico. Prosecutors charged him with commodities fraud, market manipulation and wire fraud in connection with the hack of the decentralized crypto exchange Mango Markets.

Mango Markets was exploited in October 2022 after the price of MANGO, the platform's native token, was artificially pumped. The protocol was then exploited through a bad debt position, when a borrower took funds that would not or could not be paid back, leaving Mango Markets in the hole.

The exploit involved putting $5 million worth of the stablecoin USDC into Mango Markets and then opening a remarkably long position. This caused MANGO's price to jump around 1,000% within an hour, raising the exploiter's collateral value. Then, the exploiter borrowed other tokens on Mango Markets to accrue a large debt position before making off with the funds.

Eisenberg took responsibility a few days after the incident and said his actions were part of a legal, "highly profitable" trading strategy that used Mango Markets as designed.

Eisenberg later returned $67 million in funds to Mango Markets, and the protocol's community allowed him to keep $47 million in a governance vote.

Mango Markets lost around $116 million worth of funds in the exploit.

In the courtroom

Eisenberg's defense emphasized in court that his actions enacted a lawful "winning" trading strategy. However, according to reports from Inner City Press, prosecutors called it outright fraud.

A customer from the United Kingdom took the stand during Eisenberg's trial and said they could not withdraw and lost $124,000. Eisenberg's lawyer asked the witness if Mango Markets asked if funds being put in were stolen, according to reporting from Inner City Press last week.

"That's not how DAOs work," the witness said, Inner City Press reported. "There's no one to speak to," they added.

Jurors were also shown documents last week that Eisenberg also searched the web for terms such as "market manipulation criminal" and "FBI surveillance," according to reports from Bloomberg.