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A US federal jury has convicted cryptocurrency trader Avraham Eisenberg of fraud and market manipulation. The accusations stemmed from Eisenberg’s exploitation of Mango Markets, a decentralized finance (DeFi) protocol built on the Solana blockchain.

As CriptoFácil reported, Eisenberg made the money by exploiting a flaw in Mango Markets, causing a million-dollar loss. This happened in October 2022, and Eisenberg even offered to return US$53 million, keeping the remaining US$47 million.

At the time, the Decentralized Autonomous Organization (DAO) that managed Mango Markets approved Eisenberg’s proposal with 473,166 votes, or 96.6%. Only 3.4% were against, but the DAO apparently did not move forward with the agreement.

Trader is convicted of market manipulation

Eisenberg, 28, was found guilty by jurors in federal court in Manhattan on charges of commodities fraud, commodities manipulation and wire fraud. It was the first time that the US Department of Justice (DOJ) tried a case of cryptocurrency market manipulation.

“Avraham Eisenberg executed a manipulative trading scheme on a cryptocurrency platform, defrauding the exchange and its investors of $110 million,” said Nicole M. Argentieri, head of the DOJ Criminal Division.

US authorities arrested Eisenberg on December 26, 2022. The arrest took place in San Juan, the capital of Puerto Rico, where Eisenberg resided. Since then he has remained in prison awaiting trial.

Timothy Langan of the FBI’s Criminal, Cyber, Response and Services Division commented on the case. “If you engage in fraudulent activity, whether in the cryptocurrency space or through other forms of market manipulation, you will be held accountable for your ill-gotten gains.”

Langan also emphasized the agency’s commitment to holding individuals accountable for such fraudulent activities.

However, the court has not yet revealed what Eisenberg’s sentence will be, which is scheduled to happen on July 29. But the trader can face a maximum sentence of 10 years in prison for fraud and manipulation of goods and up to 20 years for electronic fraud. In other words, your sentence can reach 30 years.

Understand the case

Mango Markets is a decentralized platform managed by Mango DAO that facilitates the lending, exchange and leveraged trading of cryptocurrencies. Prosecutors presented evidence that Eisenberg engaged in a manipulative trading strategy on October 11, 2022.

The trader allegedly used two accounts to execute simultaneous buy and sell orders for futures contracts tied to the value of the platform’s native token (MNGO) and the stablecoin USD Coin. These trades inflated the value of their contracts by 1,300% in just 20 minutes.

As a result, Eisenberg was able to take out large loans using his assets – which had artificially high values. Once this was done, the trader withdrew approximately 110 million dollars in various cryptocurrencies.

In his defense, Eisenberg claimed that his negotiations were legal and transparent, but this did not convince the jury, who took less than a day to convict him. Expressing disappointment, Eisenberg’s attorney, Brian Klein, announced plans to appeal the ruling.

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