- Avraham Eisenberg did a scam of $100 and openly admitted it too
- He faces a trial on December 4 which could give him a 20-year prison sentence
One will not be wrong if one claims that crypto space has become a breeding ground for hackers. Since the advent of this technology, people have seen several scams in Bitcoin, Ethereum, and many other projects. They all lure crypto users with loads of profits in return for their investment.
But eventually, they siphon off their money and vanish into thin air. The other ilk of scammers is the hackers who access some exchange’s wallet and steal the token. Ultimately, scams are prevalent in the crypto space,, and users must be wary about them.
A scam that rocked every crypto user
On October 11, 2022, Avraham Eisenberg, a trader, carried out a move that turned out to be a multi-million dollar scam. He executed it on Mango Markets crypto exchange and exorbitantly manipulated the platform’s price. It resulted in a loss of a whopping $110 million.
The trader and scammer, Eisenberg, will stand trial on December 4. The regulatory bodies, Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), have confirmed charges against him.
The CFTC has accused him of violating the Commodity Exchange Act and indulging in market manipulation and fraud. Moreover, the body is seeking reimbursement of funds and a sale of virtual assets. It would also impose financial sanctions on him, including a ban on crypto purchasing.
According to the charges filed by CTFC, Eisenberg tricked the exchange into elevating the price of his swap contract holdings. He tried to get away with the repayment of the enormous amount he borrowed from Mango Markets.
Maintained by the Decentralized Autonomous Organization (DAO), Mango Markets runs on the Solano blockchain. It facilitates the exchange of its native token MNGO.
The platform tried to allure the growing populace in the crypto space with various services. It offers solutions such as swapping, borrowing, lending, and assistance in trading.
Tactics of scammer & actions of the regulator
The US Department of Justice arrested Eisenberg on December 27, 2022. He also admitted to committing fraud on Twitter and touted his trick as a “lucrative trading strategy.”
It is estimated that Eisenberg created two anonymous accounts to execute this scam. He funded each of them with $5 million and took it ahead strategically. Then, he completed 400 million swaps of MNGO/USDC at $0.04 each. This took the value of the tokens held by the first wallet to $19.
He deployed the same strategy with the second account to gain a short position of the same value. As per the CFTC, Eisenberg created both versions anonymously without revealing his involvement. He then did something called a “wash” in the exchange transactions.
After the unearthing of the scam, the Mango DAO sprung into action. It announced a reward of $47 million to anyone who could find the vulnerability. Besides that, they offered immunity from legal proceedings provided the sleuth helped them regain tokens worth $67 million.
Eisenberg accepted those terms, but it’s not sure if he returned the tokens to Mango DAO. Reportedly, the Mango Market DAO might go soft on the perpetrator, but the regulators aren’t in the mood to do so.
The entire crypto community is watching this incident closely. They all are eager to know what happens to Avraham Eisenberg, who is facing multiple fraud charges. Based on the costs, Eisenberg is staring at a 20-year prison sentence.