Mango Markets heist like a fake diamond ring scam

In a Manhattan federal court, United States Assistant Attorney Tian Huang likened Avraham “Avi” Eisenberg’s alleged exploit of the Solana decentralized exchange Mango Markets to a fake diamond ring scam.

Fraud and Market Manipulation Allegations

According to Huang, Eisenberg’s actions on Oct. 11, 2022, constituted fraud and market manipulation, inflating the price of cryptocurrency by 1,000% in just 20 minutes.

Huang claimed Eisenberg borrowed over $110 million of cryptocurrency from Mango Markets but actually stole it, running off with the crypto instead of repaying the loans.

Eisenberg’s lawyer, Sanford Talkin, argued that his client operated a legal and highly profitable trading strategy. Eisenberg risked $13 million of his own funds in the trades, which could have resulted in significant losses if unsuccessful.

Transparency and Public Nature

Talkin emphasized that Eisenberg’s trades were transparent and executed openly. The public nature of blockchain transactions meant that anyone could have taken the other side of the trade if they chose to do so.

Crypto lawyer Gabriel Shapiro believes the final ruling on Eisenberg’s case could have significant implications for the crypto industry, potentially more so than the criminal trial for Sam Bankman-Fried.

Shapiro took issue with the claim that Eisenberg breached a loan agreement implied in his use of the protocol, arguing that it goes against the principles of decentralized finance (DeFi) and raises broader questions about protocol governance and user liability.