The United States prosecutors have arrested Avraham Eisenberg, who admitted to draining decentralized finance (DeFi) protocol Mango Markets with his “highly profitable trading strategy.” According to a court filing, he was arrested on Monday in Puerto Rico.
He also admitted to his involvement in draining the DeFi protocol only after a week of manipulation. However, he believed his actions to be “legal” in the open markets.
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.
— Avraham Eisenberg (@avi_eisen) October 15, 2022
He even pointed out that his actions made Mango Markets insolvent, leading to customers being unable to use their funds. He later negotiated a settlement with Mango Markets and agreed to return $67 million to the decentralized autonomous organization (DAO) governing the protocol.
“All mango depositors will be made whole,” a community post of Mango Markets stated after the settlement, adding that the protocol developers will not “pursue any criminal investigations or freezing of funds once the tokens are sent back.”
Eisenberg is now facing charges of commodities fraud and commodities manipulation and might face prison time and monetary penalty if found guilty. It is also the first legal action by the US enforcement against an individual for manipulating a DeFi protocol.
