Avraham Eisenberg, the man behind the $114 million exploit on Mango Markets, has admitted that he and his team “operated a highly profitable trading strategy” on this network. Eisenberg has confirmed that he orchestrated the attack on the Defi platform in a statement issued today.
I believe all of our actions were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are.
— Avraham Eisenberg (@avi_eisen) October 15, 2022
“I was involved with a team that operated a highly profitable trading strategy last week,” Eisenberg confirmed, adding, “I believe all of our actions were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are.” Eisenberg declined to comment on the size of his team.
This legal trading strategy required $10 million on Eisenberg’s part to drain $114 million from Mango Markets. The “trade” worked by manipulating the price oracle to inflate the mango token price three-fold from $0.30 to $0.91. This boosted the value of Eisenberg’s collateral, allowing him and his team to borrow more funds from the protocol.
Eisenberg’s name was linked to the attack barely a day later. Independent reporter Chris Burnet published an article providing evidence connecting Eisenberg to the attack. The evidence included leaked screenshots of Discord chats describing the planned attack and suspicious on-chain activities following the incident. This is not the first time Eisenberg has been linked to a Defi exploit. Earlier this year, he was accused of defrauding FortressDAO investors of $14 million.
The attack left Mango Markets insolvent, with user positions in danger of being liquidated, as the protocol could not repay the bad debt. Eisenberg noted this in his statement and said he helped negotiate a deal with the Defi platform. The Mango community voted today to allow Eisenberg to keep $47 million while returning the remaining $67 million to the project. The returned funds will be used to recapitalize the exchange. The bad debt brought on by the exploit can then be covered.
So far, Eisenberg has repaid $8 million worth of tokens, according to on-chain data. According to the details of the deal captured in the vote, this first repayment is a show of good faith on Eisenberg’s part.
Today’s statement also confirms Eisenberg’s acceptance of the $47 million bounty. The bounty forms part of an agreement between the Mango community and Eisenberg that the former will not pursue any legal action. It remains to be seen whether law enforcement officials will view this arrangement as legally binding. Earlier today, Eisenberg discussed placing a bet on Twitter that he won’t be charged with a crime by the end of 2023.
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