•The CFTC has charged Avraham Eisenberg with fraud, market manipulation, and violating the Commodity Exchange Act for his involvement in the Mango Markets hack.
• The CFTC is seeking monetary penalties, a ban on trading digital asset commodities, and restitution of funds from Eisenberg.
• This follows similar charges filed by the Department of Justice in December 2022.
In a landmark case, the Commodity Futures Trading Commission (CFTC) recently filed charges against Avraham Eisenberg for his involvement in the Mango Markets hack. This case is particularly significant because it marks the first time that a regulator has launched criminal prosecution for cryptocurrency-related crimes. In this blog post, we will provide an overview of the CFTC’s charges and their implications for other regulatory agencies investigating similar cases.
Background on the Mango Markets Hack and Avraham Eisenberg
The Mango Markets hack occurred in July 2019 when hackers breached a server at the company’s New Jersey office. They then stole approximately $2.3 million worth of Bitcoin from customers’ accounts. Following an investigation, authorities identified Avraham Eisenberg as one of the individuals responsible for carrying out the attack. He was arrested in June 2020 and charged with several counts of fraud, money laundering, and computer intrusion.
The CFTC’s Charges Against Avraham Eisenberg
The CFTC’s complaint against Avraham Eisenberg alleges that he violated multiple sections of the Commodity Exchange Act (CEA), including section 4c(b)(3)(A) and section 6(c)(1). The CEA is a federal law that regulates commodity futures trading in the United States, including cryptocurrencies such as Bitcoin. Specifically, section 4c(b)(3)(A) prohibits any person from “employing manipulative and deceptive devices or contrivances” in connection with futures contracts or options traded on designated contract markets or derivatives transaction execution facilities (DTEFs). Section 6(c)(1) imposes certain disclosure requirements on persons who solicit orders to buy or sell commodity interests on behalf of others in interstate commerce.
Under these provisions, the CFTC is seeking to impose a penalty against Eisenberg of up to three times his profits from his involvement in the attack, as well as restitution for those affected by his actions. In addition, they are seeking to ban him from trading commodities in any form for life. If successful, this would be one of the most significant legal actions taken by regulators against someone accused of cryptocurrency-related crimes in recent years.
This case serves as an important example of how regulators are beginning to take crypto-related crime more seriously and pursue harsher punishments for offenders like Avraham Eisenberg who are found guilty of such acts. While many questions remain about how this case will proceed—including potential legal challenges faced by Eisenberg—it is clear that regulators are increasingly taking steps to protect consumers who use digital currencies like Bitcoin from fraudsters like him. Going forward, other regulatory agencies investigating similar cases should keep an eye on this story as it develops over time; it could have far-reaching implications for future enforcement actions related to cryptocurrency crimes.