(Bloomberg) -- A trader accused of exploiting Mango Markets rules to steal $110 million from the exchange was convicted of fraud in the first US trial involving criminal charges tied to cryptocurrency manipulation. 

Federal jurors in New York on Thursday found Avraham Eisenberg, 28, guilty of commodities fraud, commodities manipulation and wire fraud for his actions on Oct. 11, 2022, when his trading boosted the price of futures contracts by 1,300% in 20 minutes. Sentencing was set for July 29. He faces 20 years in prison on the wire fraud count and 10 years on each of the other charges. 

Eisenberg, a self-described “applied game theorist,” traded under a false identity and drove up the price of Mango’s token, MNGO, as well as contracts based on its relative value compared to a stablecoin called USDC, prosecutors said. Eisenberg then exploited a feature of the exchange that let him “borrow” against his holdings, withdrawing $110 million in cryptocurrencies that he had no intention of repaying, the US charged. 

Prosecutors said Eisenberg “pumped” the price of MNGO tokens so he could pull off a fraud he planned for weeks against Mango Markets, a decentralized finance platform run by smart contracts.  

“He manipulated that price so he could trick the system into giving him money,” Assistant US Attorney Thomas Burnett said in closing arguments on Wednesday. “He planned to take the money and run.” 

After the verdict, Eisenberg attorney Brian Klein said in a statement: “We’re obviously disappointed, but we will keep fighting for our client. We plan to file a number of post-trial motions.”

Mango Markets, which lets people borrow, lend and trade cryptocurrencies, was overseen by a decentralized autonomous organization, or DAO. Days after his big haul, Eisenberg agreed to return $67 million in crypto in exchange for the DAO not pursuing his prosecution or freezing his remaining assets. 

Fled to Israel

Eisenberg left Puerto Rico, where he was living, shortly after his Mango trades and flew to Israel. When he returned to Puerto Rico on Dec. 26, 2022, US agents arrested him. He’s been in jail ever since, after a judge ruled he posed a risk of fleeing before trial.  

In his closing argument, Klein said his client executed a perfectly legal strategy that was permissible under the rules of the exchange. 

Eisenberg “engaged in a successful and legal trading strategy, one in which he put his own money at risk,” Klein said. 

He said Eisenberg “wholly complied” with smart contracts that controlled the decentralized finance platform, which only warned users: “This is unaudited software, use it at your own risk.” 

Klein said Eisenberg doesn’t dispute that he made a series of trades taking opposing long and short positions. 

“It’s not illegal to take big risks,” Klein argued. 

But Burnett said the rules of the Mango Markets platform don’t protect Eisenberg from prosecution for fraud and manipulation.

“Just because something is possible doesn’t make it legal,” the prosecutor said. 

Eisenberg didn’t testify during the trial, but he played an active role in his defense, taking notes throughout the testimony and frequently suggesting questions for his lawyers to pose to witnesses. Jurors deliberated more than four hours over two days.

The case is US v. Eisenberg, 23-cr-00010, US District Court, Southern District of New York (Manhattan).

(Updates with comment from Eisenberg attorney, sentencing information.)

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