Mango Markets Exploiter Avi Eisenberg Found Guilty of Fraud and Manipulation

NEW YORK – A Manhattan jury has found crypto trader Avi Eisenberg guilty of fraud and market manipulation for his $110 million heist from decentralized finance protocol Mango Markets in October 2022.

Eisenberg was arrested in Puerto Rico in December 2022 and charged with commodities fraud, commodities manipulation, and wire fraud for the scheme. He will be sentenced on July 29 by New York District Court Judge Arun Subramanian. Eisenberg faces up to 20 years in federal prison for his crimes.

“This ground-breaking prosecution epitomizes this office’s ability to employ innovative methods and cutting-edge law enforcement tools to continue to protect all financial markets," said Damian Williams, U.S. Attorney for the Southern District of New York, in a Thursday press statement. "The career prosecutors of this office continue their expertise in prosecuting financial fraud, one of our core priorities, and would-be financial criminals should think twice before daring to engage in illicit conduct on our watch.”

During his trial in New York’s Southern District, Eisenberg’s defense attempted to frame his trades on Mango Markets as “successful and legal,” arguing that they “fully complied” with the decentralized protocol’s scanty rules at the time of the heist.

But the 12-person jury didn’t buy it, instead siding with prosecutors’ arguments that Eisenberg’s actions constituted “brazen” fraud and manipulation.

Eisenberg is the latest crypto figure to be convicted of fraud, following shortly on the heels of FTX founder Sam Bankman-Fried’s conviction and subsequent 25 year sentence for his role in the collapse of FTX, and Terraform Labs co-founder Do Kwon being found liable for fraud in civil fraud case against him earlier this month.

On October 11, 2022, Eisenberg made three massive MNGO perpetual futures trades between himself, pumping the price over 1000% and then using his newly-created collateral to trick the protocol into allowing him to “borrow” $110 million in various cryptocurrencies.

But Eisenberg wasn’t “borrowing,” he was stealing – hours after the exploit, he posted an anonymous proposal to the Mango Markets decentralized autonomous organization (DAO) offering to return $67 million of his ill-gotten gains in exchange for a promise not to pursue charges against him and permission to pocket the rest.

Though Eisenberg’s defense team, headed by well-known crypto defense lawyer Brian Klein, argued that Eisenberg was acting within the law, prosecutors showed the jury a bucket of evidence – including internet searches for things like “statute of limitations market manipulation” and “FBI surveillance” and “elements of fraud” and his flight to Israel after his identity as the exploiter was unmasked – suggesting he knew his actions were criminal.

"We're obviously disappointed, but we will keep fighting for our client," Klein told CoinDesk. "We plan to file a number of post-trial motions."

UPDATE (April 18, 2024 17:38 UTC): Adds Eisenberg's sentencing date.

UPDATE (April 18, 2024 19:26 UTC): Adds statement from Damian Williams.

UPDATE (April 18, 2024 21:55 UTC): Adds statement from Brian Klein.