Cryptocurrency

Mango Markets exploiter said actions were ‘legal’

  • Mango Market’s exploiter Avraham Eisenberg could still face consequences
  • It’s not likely that Eisenburg would be released from all liability

On October 15, self-described digital art dealer Avraham Eisenberg made it clear that he was the victim in a series of tweets, claiming that he and a team engaged in a highly profitable trading strategy” and “legal open market actions, using the protocol as designed.

The exploit of October 11 was carried out by Eisenberg and his team by raising the price of their posted collateral, which was the native token of the platform, MNGO. 

Eisenberg is allowed to keep $47 million as a bug bounty

According to Michael Bacina, a partner at the Australian law firm PiperAlderman, if this had occurred in a regulated financial market it would likely be seen as market manipulation, as he stated to Cointelegraph.

Price manipulation is a cousin of misrepresentation, and engaging in misleading and deceptive conduct is unlawful and grounds for legal claims in many jurisdictions. 

Eisenberg has pledged to make all users whole, and negotiations with the Mango decentralized autonomous organization (DAO) have led to the DAO voting that Eisenberg can keep $47 million as a bug bounty and that the remaining money will be returned to the treasury.

MNGO token holders will not pursue any criminal investigations or freeze of funds, as Eisenburg has returned the agreed-upon portion of the exploited cryptocurrency, according to a condition in the proposal.

However, Bacina stated that, given the proposal’s weak language, it is unlikely that Eisenburg would be released from all liability, even from those who voted for the proposal, commenting that the circumstances are such that the offer of a release is questionable, and the proposal’s wording is weak.

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Crypto returned to the platform will now be used to reimburse users 

Nevertheless, Bacina stated that there might be a limited commercial incentive to sue Eisenburg due to the fact that any legal claims would be reduced by the amount a member received as a result of the proposal.

He elaborated that assuming claims survive the proposal, any claims would still need to be reduced by any amounts which had been received by a member as a result of the proposal, which may mean that many members have limited commercial incentive to sue Mr. Eisenberg. 

This would be the case even if claims did survive the proposal. Eisenberg was contacted by Cointelegraph for comment, but the publication did not get a response right away.

Nancy J. Allen
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