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According to a complaint made public on Tuesday in Manhattan
federal court, Avraham Eisenberg's trades in futures related to
Mango's crypto token MNGO enabled him to withdraw $110 million
in cryptocurrencies from other investors' deposits, with no
apparent intention to repay the funds.
Eisenberg could not be immediately reached for comment, and it
is unclear whether he has a lawyer.
Mango is a decentralized cryptocurrency exchange run by Mango
DAO that lets investors lend, borrow, swap, and use leverage to
trade cryptocurrency assets.
The Dec. 23 complaint signed by FBI Special Agent Brandon Racz
said Eisenberg on Oct. 11 used two accounts to concurrently buy
and sell futures based on the relative values of MNGO and the
stablecoin USD Coin (USDC).
By being on both sides of the transaction, Eisenberg
artificially inflated the price of MNGO relative to USDC,
allowing him to borrow and then withdraw $110 million of
different cryptocurrencies, the complaint said.
Mango soon began negotiations with Eisenberg and reached a
settlement to recoup $67 million.
"All mango depositors will be made whole," with token holders
who vote for the settlement agreeing not to "pursue any criminal
investigations or freezing of funds once the tokens are sent
back," a community post said at the time.
Eisenberg claimed responsibility for the trading, the complaint
said, and tweeted on Oct. 15 that "the exchange this took place
on, Mango Markets, became insolvent."
He also tweeted: "I believe all of our actions 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."
Mango could not immediately be reached for comment. The office
of U.S. Attorney Damian Williams in Manhattan did not
immediately respond to a request for comment.
The case is U.S. v. Eisenberg, U.S. District Court, Southern
District of New York, No. 22-mj-10337.
(Reporting by Jonathan Stempel in New York; Additional reporting
by Hannah Lang; Editing by Rosalba O'Brien)
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