A Lawyer Claims That Crypto Trader's $110 Million Haul Was Not Theft

A Lawyer Claims That Crypto Trader's $110 Million Haul Was Not Theft

A jailed trader accused of manipulating Mango Markets to steal $110 million was really making legal, high-risk trades and had no intent to cheat, his lawyer told New York jurors.  

Prosecutors say Avraham Eisenberg manipulated Mango Markets futures contracts on Oct. 11, 2022, by increasing swap prices by 1,300% in 20 minutes and then “borrowed” against them using pseudonym accounts before departing the country. The government alleges Eisenberg stole the money.  

On Tuesday, defense lawyer Sanford Talkin claimed that his client was simply engaged in a crypto environment with different regulations than traditional finance. Eisenberg, like other Mango Market dealers, didn't have to provide personal information, creditworthiness, or loan repayment intent, the lawyer added. Talkin said his strategy cost $13 million.

“They were operating in a high-risk cryptocurrency sector,” Talkin added. “People go in with their eyes open because they can get a big return quickly. Sometimes astronomical.” According to Talkin, “Avi Eisenberg executed a successful, legal trading strategy.”  

Mango Markets enables users borrow, lend, and trade cryptocurrency using smart contracts and a DAO. The theft alleged by prosecutors is one of the largest DAO criminal cases and may be the first time a US criminal jury will decide what “DeFi” transactions are permissible.  

Eisenberg faces wire fraud, commodities fraud, and manipulation charges. Eisenberg is accused by the US of using two anonymous Mango Markets accounts to acquire and sell futures contracts. The value of Mango's token, MNGO, and USDC, a stablecoin, determined those contracts.

Talkin told jurors that the smart contract “totally excludes the intent of the borrower to repay the loans” because the MNGO token is not a commodity. “The government is claiming an obligation that doesn't exist.”  

Attorney Tian Huang compared Eisenberg to a con artist who sells cheap plastic jewelry as a diamond ring in her case summary. Huang stated, “He used an asset with a big and artificial value he created to con Mango Markets into borrowing over $110 million of cryptocurrency.” Not really borrowing. He stole. Avraham Eisenberg stole crypto. The defendant committed fraud and market manipulation.”  

She said Eisenberg discovered his target in Mango Markets, “pumped” the MNGO token's value, using a Ukrainian woman's account, and fled the US within a day. Huang said he immediately agreed to repay $67 million to the Mango DAO in exchange for no criminal inquiry.  

The defendant thought he had it made, that he had bought himself out of trouble, that he had gotten away with it,” the prosecution said. Eisenberg flew from Puerto Rico to Israel the next day. His flight back to Puerto Rico in late December 2022 resulted in his arrest. He's been in detention since prosecutors claimed he'd flee.  

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