The architect behind October $114 million exploit on the Solana-based DeFi platform Mango Markets has been arrested in Puerto Rico. Federal agents arrested Avraham Eisenberg for his role in the exploit and charged him with two counts of commodities fraud and commodities manipulation.

Eisenberg Engaged in a Scheme to Defraud and Manipulate the Price of Perpetual Futures Contracts

On the count of commodities fraud, court documents state that in October 2022, Mr Eisenberg used and employed ‘a manipulative device, scheme, and artifice to defraud,’ made untrue and misleading statements and engaged in practices and courses of business which operated ‘as a fraud and deceit upon other persons.’

Concerning the second charge of commodities manipulation, Eisenberg is charged with engaging ‘in a scheme involving the intentional and artificial manipulation of the price of perpetual futures contracts on a cryptocurrency exchange called Mango Markets.’

Eisenberg and His Team Kept $47M of the $114M as a Bug Bounty

The arrest and charges against Avraham Eisenberg come less than two months after he and his team exploited Mango Markets to the tune of $114 million. The scheme involved using USDC to take an oversized position on the MNGO-PERP contract resulting in the price of MNGO/USD experiencing an almost instant five to ten-fold increment on various exchanges.

The price increment resulted in the Switchboard and Pyth oracles updating the MNGO benchmark price to over $0.15, causing the MNGO-PERP position to gain profit. The attackers then borrowed and withdrew BTC (sollet), USDT, SOL, mSOL, and USDC from the Mango protocol.

After the exploit, Eisenberg and his team communicated on the Mango DAO forum, initiating a proposal whereby they would return some of the mSOL, SOL and MNGO to cover any remaining bad debt to make users whole. The proposal also included dropping any legal charges.

However, the community voided the first proposal, with a deal emerging in which the attackers would return $67 million of the tokens to pay bad debt and keep the remaining $47 million as a bug bounty. The second proposal passed around the same time Eisenberg came forward as being behind the exploit.

(By John P. Njui)