- Avraham Eisenberg, a notorious online personality, has been sued by Mango Labs for exploiting the decentralized finance (DeFi) protocol Mango Markets for millions of dollars worth of cryptocurrencies in October 2022.
- The lawsuit seeks $47 million in damages plus interest, and it also requests the court to rescind an agreement between Eisenberg and Mango’s related decentralized autonomous organization (DAO) and declare it “invalid and unenforceable.”
- Eisenberg outed himself as the attacker who drained around $117 million from Mango Markets’ treasury in October 2022, claiming it was a “highly profitable trading strategy” and that it was “legal open market actions, using the protocol as designed.”
Truly no shame
Avraham Eisenberg, a notorious online personality, has been facing a lawsuit for his alleged involvement in the exploitation of the decentralized finance (DeFi) protocol Mango Markets. The lawsuit was filed by Mango Labs, the company behind Mango Markets, on January 25, 2023, in the United States District Court for the Southern District of New York.
Avraham Eisenberg, the alleged exploiter of the decentralized finance protocol Mango Markets, is seeking to keep his share of crypto that he gained from his “highly profitable trading strategy.” On February 15, his attorneys filed a motion in a New York District Court objecting to a lawsuit from Mango that asks for $47 million in damages plus interest starting from the time of Eisenberg’s October attack, which drained around $117 million from the protocol. The lawyers argued that Eisenberg shouldn’t need to pay back any more funds to the DeFi platform due to a settlement agreement that he reached with Mango DAO, arguing that the “matter was settled.”
The Mango lawsuit alleges that Eisenberg exploited the Mango Markets platform for millions of dollars worth of cryptocurrencies in October 2022. The attack resulted in the draining of around $117 million from Mango Markets’ treasury of its native Mango (MNGO) token. Afterward, Eisenberg outed himself as the attacker, claiming that it was a “highly profitable trading strategy” and that it was “legal open market actions, using the protocol as designed.”
Eisenberg drained the millions from Mango Markets’ treasury by manipulating the price oracle data of its native Mango token, which allowed him to take out under-collateralized loans. The latest complaint from Mango Labs alleges that Eisenberg “was not engaged in lawful bargaining” and forced Mango DAO to enter into an “unenforceable settlement agreement” under duress. The agreement, which was related to a governance proposal submitted by Eisenberg, asked the DAO to allow him to keep $47 million, with a stipulation that Mango Markets wouldn’t pursue criminal charges for the draining of its treasury. In addition to the lawsuit from Mango Labs, Eisenberg is facing charges from the Federal Bureau of Investigation, the Commodity Futures Trading Commission, and the U.S. Securities and Exchange Commission.
All fair and square
According to the lawyers representing Eisenberg, the matter was settled after the Mango DAO passed the governance proposal, which saw Eisenberg keep a portion of the pilfered funds as a bug bounty, and Mango shouldn’t be able to pursue legal action. However, Mango Labs argues that the settlement agreement was not lawful, and it seeks $47 million in damages plus interest starting from the time of the attack.
This is not the first time that Eisenberg has been hit by charges or lawsuits relating to his attack on the DeFi protocol. On December 27, 2022, Eisenberg was arrested in Puerto Rico and charged by the Federal Bureau of Investigation (FBI) with one count each of commodities fraud and manipulation for his attack on the platform. The Commodity Futures Trading Commission (CFTC) followed up on the FBI’s charges on January 9, 2023, pinning Eisenberg with two counts of market manipulation. On January 20, 2023, the U.S. Securities and Exchange Commission (SEC) dealt a further blow to Eisenberg with charges of violations relating to anti-fraud and market manipulation provisions of U.S. securities laws.
The outcome of the lawsuit will have implications for the broader DeFi industry, where security incidents and the resulting disputes are becoming increasingly common. This case may set a precedent for how DeFi protocols can pursue legal action and recover funds in cases of exploitation or fraud. As DeFi continues to grow, it is likely that more legal disputes will arise, highlighting the need for greater regulatory clarity in the space.