(HedgeCo.Net) The Securities and Exchange Commission has 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. Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.
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 and civil charges, brought by the Department of Justice and the Commodities Futures Trading Commission (CFTC), respectively.
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.
The complaint also alleges that, as a result of these transactions, the price of MNGO perpetual futures on Mango Markets, including those held by Eisenberg, increased. 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.
“As we allege, Eisenberg engaged in a manipulative and deceptive scheme to artificially inflate the price of the MNGO token, which was purchased and sold as a crypto asset security, in order to borrow and then withdraw nearly all available assets from Mango Markets, which left the platform at a deficit when the security price returned to its pre-manipulation level,” said David Hirsch, Chief of the Crypto Assets and Cyber Unit. “As our action shows, the SEC remains committed to rooting out market manipulation, regardless of the type of security involved.”
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.