Prosecutors in the United States have arrested the individual responsible for the exploit of Mango Markets, a decentralized finance (DeFi) protocol. The individual known as Abraham Eisenberg used a “highly profitable trading strategy” to exploit Mango Markets.

US authorities arrest Mango Markets manipulator

A court filing made by US authorities noted that Eisenberg was arrested on Monday while in Puerto Rico. Eisenberg was found guilty of exploiting Mango Markets in Mid-October, where he stole and withdrew funds from the DeFi platform.

Eisenberg conducted the exploit by using two accounts to sell a large number of perpetual contracts denominated in MNGO, the native token for the Mango markets DeFi platform. He sold this token from one of his accounts to the other, increasing the price of MNGO tokens by 1300% in less than one hour.

After the price of the token pumped, the exploiter used the MNGO tokens as collateral to take a $110 million loan from Mango Markets. He received the loan in the form of multiple cryptocurrencies that he quickly withdrew from the platform.

Eisenberg withdrew all the cryptocurrencies deposited on the DeFi platform by conducting this exploit. The US authorities noted that Eisenberg participated in this scheme to manipulate prices on the DeFi platform.

“Eisenberg engaged in a scheme involving the intentional and artificial manipulation of the price of perpetual futures contracts on a cryptocurrency exchange called Mango Markets, and other manipulative and deceptive devices and contrivances,” said Brandon Racz, an FBI Special Agent.

Eisenberg admitted to Mango Markets’ exploit

Eisenberg admitted that he manipulated Mango Markets and drained funds from the DeFi protocol. He confirmed his participation in the exploit a week after the manipulation happened. However, he noted that his actions would be legal in the open market.

In a statement he published on Twitter, Eisenberg said that the Mango Markets development team had not anticipated the effects that could come from such an action being taken. He even pointed out that his trade had resulted in Mango Markets being insolvent.

Eisenberg negotiated a settlement with Mango Markets and agreed to return $67 million to the DeFi platform. After this settlement, the Mango Markets team noted that all the depositors on the DeFi platform would be made whole. The platform added that the protocol developers would not seek criminal investigations or freeze the exploiter’s funds.

US authorities are charging Eisenberg with multiple offenses, including commodities fraud and commodities manipulation. If he is found guilty, he could face prison time and pay a monetary penalty. The charges mark the first time US authorities are taking action against an exploit in the DeFi space.