Mango Markets swindler convicted for brazen $110 million crypto manipulation scheme

The man behind a $110 million theft from popular crypto platform Mango Markets was convicted in a federal court on Thursday. 

Avraham Eisenberg, 28, was found guilty of commodities fraud, commodities market manipulation, and wire fraud.

In October 2022, Eisenberg used a flash loan attack to siphon the money from Mango Markets — later boasting of his actions on Twitter. 

Flash loan attacks — which have become a popular tactic for cybercriminals and even nation-state actors — involve investors borrowing funds that do not require collateral, buying a significant amount of a cryptocurrency to artificially raise its price and then offloading the coins. The loan is paid back and the borrower keeps any profit.

U.S. Attorney Damian Williams called it the “first-ever cryptocurrency market manipulation case” and said the guilty verdict was unanimous.

Eisenberg will be sentenced on July 29 and is facing up to 30 years in prison. He was initially arrested in Puerto Rico after returning there from Israel in December 2022. 

FBI agent Brandon Racz said in an indictment that Eisenberg effectively sold a large amount of the platform’s native crypto token, called MNGO, to another account he controlled, artificially increasing the price of the coin in a span of 20 minutes.

“Because Mango Markets allows investors to borrow and withdraw cryptocurrency based on the value of their assets on the platform, the increase in the value of the MNGO Perpetuals Eisenberg had purchased allowed Eisenberg to borrow, then withdraw, approximately $110 million worth of various cryptocurrencies from Mango Markets, which came from deposits of other investors in the Mango Markets exchange,” Racz said. 

Eisenberg had no plans to repay the borrowed money, Racz said. After he withdrew his deposits on the platform, the price of MNGO Perpetuals fell, leading to losses among other investors.

Eisenberg negotiated with the platform to return the funds, eventually refunding $67 million in exchange for an agreement that Mango Markets would not go to the police. 

In several now-deleted Tweets included in the indictment, Eisenberg explained in detail what happened, claiming all of his trades “were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are.” Much of what was in the tweets resembled his lawyer’s defense. 

“Unfortunately, the exchange this took place on, Mango Markets, became insolvent as a result, with the insurance fund being insufficient to cover all liquidations. This led to other users being unable to access their funds,” he admitted in several tweets. 

“To remedy the situation, I helped negotiate a settlement agreement with the insurance fund with the goal of making all users whole as soon as possible as well as recapitalizing the exchange.”

After agreeing to return some of the funds, Eisenberg fled to Israel. The indictment did not say why Eisenberg traveled back to his home in Puerto Rico where he was arrested.