SEC Charges Avraham Eisenberg with Manipulating Mango Markets’ “Governance Token” to Steal $116 Million of Crypto Assets
On January 20, 2023, the Securities and Exchange Commission (the “SEC”) charged Avraham Eisenberg with orchestrating an attack on a crypto asset trading platform, Mango Markets, by manipulating the MNGO token, a so-called governance token that was offered and sold as a security.
Eisenberg, a 27-year-old U.S. citizen who was arrested and detained at MDC Guaynabo, Puerto Rico, is awaiting transport to appear before the Southern District of New York where he is facing parallel criminal charges brought by the Department of Justice [read the Criminal Complaint] and civil charges brought by the Commodities Futures Trading Commission (CFTC) [read the CFTC Complaint].
Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.
According to the SEC’s complaint, beginning on October 11, 2022, Eisenberg engaged in a scheme to steal approximately $116 million worth of crypto assets from the Mango Markets platform. The complaint alleges that Eisenberg, who perpetrated the scheme while living in Puerto Rico, used an account that he controlled on Mango Markets to sell a large amount of perpetual futures for MNGO tokens and used a separate account on Mango Markets to purchase those same perpetual futures. The complaint further alleges that Eisenberg then engaged in a series of large purchases of the thinly traded MNGO token for the purpose of artificially raising the price of MNGO token relative to the crypto asset USD Coin.
According to the complaint, the trading volume on the day of Eisenberg’s manipulation was over 2,000% higher than the average volume for MNGO the preceding ten days and 2,018% higher than the average volume for the preceding 90 trading days. Eisenberg’s trading accounted for as much as 90% of the trading volume on some exchanges on October 11, 2022.
The complaint also alleges that, as a result of Eisenberg’s transactions, the price of the MNGO token artificially increased from approximately 0.0382 USDC/MNGO to as high as approximately 0.91 USDC/MNGO on some crypto asset trading platforms. According to the complaint, Eisenberg used the increased value of his MNGO perpetual futures position to borrow and withdraw approximately $116 million worth of various crypto assets from Mango Markets, effectively draining all available assets from the Mango Markets platform and leaving it at a deficit because the total value of users’ assets on Mango Markets at the time of Eisenberg’s attack was approximately $104 million.
The SEC’s complaint, filed in federal district court in Manhattan, charges Eisenberg with violating anti-fraud and market manipulation provisions of the securities laws and seeks permanent injunctive relief, a conduct-based injunction, disgorgement with prejudgment interest, and civil penalties.
To speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected]. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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