Mango Market attacker convicted of fraud and market manipulation

• A New York federal jury convicted Avi Eisenberg for his role in Mango Market's $110 million attack.
• The attacker claimed his actions were legal before returning some of the ill-gotten funds.
• Eisenberg could face up to 20 years in prison after being convicted of wire fraud and market manipulation.

Mango Market attacker Avi Eisenberg was convicted by a federal jury on Thursday for "fraudulently obtaining" funds from the Solana-based decentralized exchange (DEX). He could face up to 20 years in prison for his role in the $110 million attack.

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Eisenberg convicted for Mango attack

The US judiciary continued taking action against on bad actors in the crypto space after convicting Avi Eisernberg of commodities fraud, commodities market manipulation, and wire fraud concerning the manipulation of the Mango Markets derivatives DEX. Eisenberg was earlier arrested in December 2022 in Puerto Rico when US prosecutors charged him with the crimes above.

In October 2022, Eisenberg exploited a vulnerability in the Solana-based derivatives exchange Mango, which enabled him to "fraudulently obtain" about $110 million.

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He deposited $5 million worth of USDC into Mango and used it to open three large long positions of MNGO. This action plumped MNGO's price by 1,000%. With such high collateral value, he tricked the protocol to allow him to borrow cryptocurrencies worth $110 million. However, Eisenberg never intended to pay back. He later reached out to Mango's decentralized autonomous organization (DAO), claiming his actions were "legal" and within the confinement of the protocol's design. Eisenberg later offered to return $67 million and keep the rest of the funds, which Mango's DAO agreed to through a governance vote.

Eisenberg was convicted on Thursday by a federal jury in New York and could face up to 20 years in prison when he is sentenced on July 29. "This prosecution—the first involving the manipulation of cryptocurrency through open-market trades—demonstrates the Criminal Division's commitment to protecting U.S. financial markets and holding wrongdoers accountable, no matter what mechanism they use to commit manipulation and fraud," said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department's Criminal Division.

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Although Eisernberg's defense argued that his actions were legal, the jury sided with the stance of prosecutors who called it a scam, according to Inner City Press. "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. 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," stated US Attorney for the Southern District of New York Damian Williams.

The US Justice Department had convicted and sentenced several individuals related to cryptocurrency crime earlier in the past three months.