New York, NY – The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Avraham Eisenberg, alleging a fraudulent scheme to illegally obtain over $110 million in digital assets from Mango Markets, a purported decentralized digital asset exchange. This marks the CFTC’s first enforcement action targeting manipulation on a decentralized platform, specifically involving what is known as “oracle manipulation.”
The CFTC alleges that on October 11, 2022, Eisenberg misappropriated the funds through the manipulation of Mango Markets’ “oracle,” the data feed used to determine asset values. He reportedly created two anonymous accounts and established large, leveraged positions in a swap contract based on the price of MNGO, Mango Markets’ native token, and USDC, a stablecoin.
According to the complaint, Eisenberg artificially inflated the price of MNGO by rapidly purchasing substantial quantities across multiple digital asset exchanges. This inflated price was then fed into Mango Markets’ oracle, causing a temporary, over 13-fold increase in the value of his swap positions within a 30-minute period. He then cashed out these artificially inflated swaps, draining approximately $110 million in digital assets from the platform, impacting other users’ deposits.
Eisenberg subsequently attempted to mitigate liability by returning roughly $67 million to Mango Markets, contingent on the platform agreeing not to pursue criminal investigations or freeze funds. He retained approximately $47 million in various digital assets.
The CFTC is seeking civil monetary penalties, disgorgement of ill-gotten gains, restitution, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA). The agency asserts the CEA prohibits deception and manipulation regardless of the trading venue, be it a registered exchange or a decentralized blockchain platform.
A parallel criminal complaint was unsealed on December 27, 2022, by the U.S. Attorney’s Office for the Southern District of New York, charging Eisenberg with commodities fraud and manipulation. The CFTC collaborated with the U.S. Attorney’s Office and the Securities and Exchange Commission throughout the investigation.
Source: CFTC.gov
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