🌋 Trader Faces Charges for $110 Million DeFi Scheme
postedΒ 8 Apr 2024
U.S. authorities have indicted trader Avraham Eisenberg for orchestrating a fraud and market manipulation scheme on the decentralized exchange Mango Markets. The reports indicate that in late 2022, he intentionally drove up the price of the MNGO token by 1300%, leveraging it as collateral to secure a $110 million loan he failed to return.
Subsequently, the token's value crashed. Eisenberg, however, disputes any misconduct, asserting his actions exploited a legal gray area within the DeFi application's coding. Contrarily, law enforcement points to traditional laws, suggesting that the technical implementation does not shield users from fraud sufficiently.
If the code allows somebody to do that, does the actual law? Obviously, the government took a different approach that code is not law. Just because there is an opportunity to exploit it does not mean that itβs legal,commented Chris Janczewski, Head of Global Investigations at TRM Labs.
Although Eisenberg reached a settlement with the exchange's depositors, refunding $67 million to avoid litigation, authorities proceeded with formal charges. Legal representatives and the prosecution have abstained from commenting on this case's next steps, which will unfold in the New York federal court.
This court previously hosted trials for FTX's former CEO Sam Bankman-Fried and Terraform Labs' co-founder Do Kwon, associated with the TerraUSD (UST) stablecoin that nearly collapsed. This upcoming trial is poised to be a landmark case, scrutinizing the legality of DeFi transactions in front of a jury for the first time.
More breaking news
More breaking news
Breaking news
⚡ Gensler Faces Accusations of Misleading Congress
