“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.”
The Securities and Exchange Commission has charged Avraham Eisenberg with orchestrating an attack on a crypto asset trading platform, Mango Markets, by manipulating the MNGO token, a so-called governance token that was offered and sold as a security.
The 27-year-old U.S. citizen who was arrested and detained at MDC Guaynabo, Puerto Rico, is already facing parallel criminal and civil charges, brought by the Department of Justice and the Commodities Futures Trading Commission (CFTC), respectively.
Eisenberg allegedly stole $116 million worth of crypto assets
The SEC alleges that beginning on October 11, 2022, Eisenberg engaged in a scheme to steal approximately $116 million worth of crypto assets from the Mango Markets platform.
Eisenberg allegedly used an account that he controlled on Mango Markets to sell a large amount of perpetual futures for MNGO tokens and used a separate account on Mango Markets to purchase those same perpetual futures. He then engaged in a series of large purchases of the thinly traded MNGO token for the purpose of artificially raising the price of MNGO token relative to the crypto asset USD Coin, according to the complaint.
The manipulative trading allowed the price of MNGO to jump over 13-fold during a 30-minute span, resulting in a temporary, artificial spike in the value of Eisenberg’s swap positions. With the increased value of his MNGO perpetual futures position, he allegedly borrowed and withdrew 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, said: “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.”
Eisenberg returned $67 million in an attempt to evade liability
The SEC’s complaint, however, doesn’t mention that in an attempt to evade liability, Eisenberg agreed to return a portion of the misappropriated digital assets on the condition that Mango Markets agreed, among other things, to “not pursue any criminal investigations or freezing of funds.”
He ultimately returned approximately $67 million to Mango Markets, while retaining approximately $47 million worth of various digital assets.