Mango Markets is a decentralized perpetual exchange on Solana. On October 11, Eisenberg and his trading partners took out a large position in Mango’s perpetual futures contracts, thereby artificially inflating the price of the illiquid MNGO token from $0.3 to $0.91. They then used their significant unrealised profits as collateral to borrow the protocol’s assets, and drained over $100 million from its treasury.
The exploiters subsequently submitted a proposal in the Mango governance forum to give back the majority of the funds (and therefore make Mango depositors whole) in exchange for $47 million and the promise of dropping any criminal investigation. Shortly after the proposal passed, Eisenberg announced on Twitter that he had been responsible for the exploit, famously declaring that he had “operated a highly profitable trading strategy” the previous week.
Eisenberg’s open and brazen attitude may not have done him any favors. The affidavit against him specifically mentions Eisenberg’s “highly profitable trading strategy” tweet, along with several others that show that Eisenberg was aware of laws prohibiting market manipulation.
So far, the case against Eisenberg solely concerns the Mango Markets exploit; however, the trader is also suspected by the crypto community of having run similar schemes on Curve, Fortress DAO, and Solend. Further indictments may be on the way.
Disclaimer: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.
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