SEC files charges against hacker involved in Mango Markets $116 Mln exploit

Key Takeaways

  • SEC had accused Avraham of manipulating Mango Markets’Markets’ MNGO governance token to steal crypto funds.
  • SEC claims MNGO, Mango Markets’Markets’ governance token, is security.

The US Securities and Exchange Commission has pressed charges against Avraham Eisenberg, who is alleged to be responsible for the $116M  crypto exploit of the Solana-based decentralized finance (DeFi) hub Mango Markets.

Earlier this month, Commodity Futures Trading Commission(CFTC), another leading regulatory watchdog, also filed charges against Avraham.CFTC had accused Eisenberg of violating federal commodities law by using a “manipulative or deceptive device” to manipulate the price of the MNGO token through swaps,

In its latest statement, the SEC accused Avraham of manipulating Mango Markets’Markets’ MNGO governance token to steal crypto funds.

SEC had filed charges reinstating its claim that MNGO, Mango Markets’Markets’ governance token, is security. The watchdog further added irrespective of MNGO’s labeling as a ” governance token; it was “purchased and sold as a crypto asset security.”

SEC pointed out MNGO holders had expectations of profit and ” entered into a common enterprise” which makes it fall under the gambit of securities laws

Commenting on the exploit, David Hirsch, head of the SEC’s Crypto Assets and Cyber Unit, said “Eisenberg engaged in a manipulative and deceptive scheme to artificially inflate the price of the MNGO token, which was purchased and sold as a crypto asset security, to borrow and then withdraw nearly all available assets from Mango Markets, which left the platform at a deficit when the security price returned to its pre-manipulation level.”

On October 11, Avraham Eisenberg, the hacker reportedly behind the Mango Markets exploit, manipulated the value of a posted collateral — the platforms’ governance token, MNGO — to higher prices, then took out significant loans against the inflated collateral, which drained Mango’sMango’s treasury.

After the exploit, the hacker demanded a settlement, filling a proposal on the Mango Market’sMarket’s decentralized autonomous organization forum asking for $70 million at that time. 

Following this, the Mango Markets community made a deal with Eisenberg allowing the hacker to keep $47 million as a bug bounty. The exploiter later returned $67 million to Mango Markets. Authorities arrested the Mango Markets exploiter in Puerto Rico, charging him with market manipulation and fraud.

Saniya Raahath
Saniya Raahath

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