CFTC files lawsuit against Solana DEX Mango token price manipulator Eisenberg

Avraham Eisenberg, a self-described digital artist, is facing a lawsuit by the Commodity Futures Trading Commission (CFTC) for violation of the federal commodities law by inflating the price of Solana-based decentralized exchange (DEX), Mango Market's native token MNGO using a “manipulative or deceptive device”.

Eisenberg used what is known as a 'wash' trade to effectively pump and dump MNGO last October before making off with the $116 million in funds, including $50 million Solana. After admitting the hack to thousands of followers on Twitter and asking them to vote on whether he deserved a 'bug bounty' of $45 million for the exploit, Eisenberg, was arrested by the Department of Justice who took a dim view of his actions - despite Twitter followers voting in his favour. 

Solana DEX exploiter faces CFTC

Eisenberg made off with over $100 million after artificially manipulating the price of MNGO in what is known as a 'wash trade' in October 2022. He is facing charges of manipulation and deception as well as false inflation of an asset price by the Department of Justice and was arrested last year. He is currently in detention awaiting trial.

More recently the Commodity Futures Trading Commission (CFTC) has also got in on the act, filing a lawsuit against the exploiter on Monday, January 9, 2023. According to the CFTC filing, Eisenberg used a 'wash trade' in which he illegally took both sides of the same trade.

In its filing, the CFTC claims the exploiter used two seperate Mango accounts in the attack, which he was allowed to open because the exchange's lax security. In the first account he opened a large, long, leveraged trade in MNGO swaps worth $19 million. He then manipulated the token's price higher by buying MNGO on three outside exchanges, Solarium, Jupiter and Raydium. 

As a result, MNGO rose from roughly $0.038 to up to $0.490 (a 13x increase). Eisenberg then used his other Mango account to start selling MNGO at its peak, causing the price to crash. It is a strategy similar to those used by traders to 'pump and dump' penny stocks.

In the final stage of the complex operation Eisenberg used the inflated value of the Mango swaps in his first account to borrow and withdraw over $120 million in various crypto assets from Mango Markets, including $50 million worth of SOL, as well as BTC, USDT, and USDC. According to experts, the whole attack, from start to end, took only a matter of minutes.

Following his arrest, Eisenberg stated that he believed that his actions were legal and that he was working to return a part of the funds he exploited to Mango Markets. However, his public admittance on Twitter of the manipulation scheme led to the authorities finding the exploiter in violation of the law. In regards to the same, the CFTC stated,

“Contrary to his purported belief that his actions were legal, in fact, they constituted blatant manipulation of spot prices and swaps.”

Solana price notes an uptick

Despite the news, Solana price has begun 2023 with a rally that raised the value of the cryptocurrency from $9.63 to $16.48 at the time of writing. Registering an almost 70% increase in price. After breaking above the key December 12 highs at roughly $16.12, the last lower high in the prior downtrend, SOL is now making peaks and troughs higher, potentially reversing the trend and inching closer to the $20.00 mark. 

Solana price needs to make another 16% rise in order to tag and flip the $18.96 resistance level into support. This will allow the altcoin to extend its recovery. However, if the bullishness subsides and the prices correct and SOL falls back below the $16.12 level it could indicate it is still stubbornly trending down. 

SOL/USD 1-day chart

A further decline, resulting in the cryptocurrency tagging the critical support at $11.70 would if that support were broken invalidate the bullish thesis, thereafter pushing the price back to where it was at the beginning of the year.