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The infamous DeFi hacker and Twitter personality behind several self-proclaimed “highly profitable trading strategies” has been arrested by authorities for market manipulation charges.Avraham Eisenberg is a U.S. citizen based in Puerto Rico, who studied at Yeshiva University with a degree in mathematics. Prior to DeFi he founded and operated Thimes Solutions Inc from November 2016 to December 2020. Avraham recently sprouted to fame in all of the wrong ways, after committing an advanced attack on DeFi protocol Mango Markets, in which he stole over $114M.Immediately after the attack, he took to Twitter to brag about the advanced arbitrage trade, calling it a “highly profitable trading strategy.” This resulted in a series of memes being made in his honor, magnifying publicity surrounding his account.The arbitrage trade worked as follows:-2 accounts were funded with USDC and proceeded to take on an outsized position in MNGO-PERP-Underlying MNGO/USD prices on various exchanges (FTX, Ascendex) experienced a 5-10x price increase in a matter of minutes-Switchboard and Pyth oracles updated their MNGO benchmark price to $0.15+-The value of the account that was long MNGO-PERP increased from the unrealized profit-account borrowed and withdrew BTC (sollet), USDT, SOL, mSOL, USDC out of the Mango protocol-This maxed out the borrows available from the $190M equivalent deposits on the platformIn the end, Avraham Eisenberg risked $10M to profit upwards of $100M from the advanced market manipulation trades. As the saint he is, Avraham returned $67M in stolen funds, keeping $48M as “bug bounty.”This isn’t exactly his first round in exploiting DeFi protocols for his own gain. Avraham Eisenberg started Fortress DAO early this year, and committed some of the same atrocities we saw with Mango.A short time after launching, it was evident that Fortress DAO was a failed project due to lack of management from the founding team. The community eventually began demanding redistribution of the projects treasury. Before changes were proposed, the team converted half of the treasury’s stables to FUSD, amounting to $6M. At the same time, the Discord servers were down for a couple of hours.Following this, a proposal for redemptions was published on snapshot, and was overwhelmingly approved. The redemption process began and should have ended at 25.02, in order to convert all remaining assets into FUSD.However, Avraham Eisenberg had different plans. After the redemption process started, Avraham allowed bonding with the project’s native token, minting 190M FUSD by looping FUSD as collateral for minting. Then, he proceeded to set the bonding price at $7.5, nearly 40% under the backing price. Therefore, no-one bonded.The bonding price was continually lowered, and once it hit $6, he bonded $50K sFUSD from his wallet. The price of FORT began to crash, since there was no point in holding a token which somebody can acquire for much cheaper. The mayhem continued until bonding price hit around $1.5, 10 times lower than the original backing price.Finally, Avraham sent 20M FUSD and 1M USDC to his wallet, emptying the FUSD multisig. Avraham successfully ran off with $14M in assets, and 20M FUSD.Avraham then raised the bonding price to $15, allowing the price to recover a bit before again lowering the bonding price to $1.5, and this time around he bonded a metric ton of FUSD to acquire 700K FORT, with the total supply of the token being only 1M.As if it couldn’t get any worse, Avraham then began writing his own proposal for the protocol, with majority voting power in the project. All in all, Avraham extracted about $14M from the redemption process, leaving holders with just 7% the amount they should have received.This was the money Avraham then used to exploit Mango Markets.The malicious intent of Avraham Eisenberg thankfully did not go unnoticed by authorities, but the case also brought up some interesting revelations in the regulatory eye of crypto.The official charges against Eisenberg are commodities fraud and market manipulation for his antics. These offenses are punishable with a maximum sentence of 25 years, including a hefty fine.With the arrest of Sam Bankman-Fried and Avraham Eisenberg, 2022 is shaping up to be a big year of justice for some of the largest fraudsters and offenders in DeFi.
Avraham Eisenberg Arrested in Puerto Rico
Created by Bakery
Dec 30, 2022
The infamous DeFi hacker and Twitter personality behind several self-proclaimed “highly profitable trading strategies” has been arrested by authorities for market manipulation charges.
Avraham Eisenberg is a U.S. citizen based in Puerto Rico, who studied at Yeshiva University with a degree in mathematics. Prior to DeFi he founded and operated Thimes Solutions Inc from November 2016 to December 2020. Avraham recently sprouted to fame in all of the wrong ways, after committing an advanced attack on DeFi protocol Mango Markets, in which he stole over $114M.
Immediately after the attack, he took to Twitter to brag about the advanced arbitrage trade, calling it a “highly profitable trading strategy.” This resulted in a series of memes being made in his honor, magnifying publicity surrounding his account.
The arbitrage trade worked as follows:
-2 accounts were funded with USDC and proceeded to take on an outsized position in MNGO-PERP
-Underlying MNGO/USD prices on various exchanges (FTX, Ascendex) experienced a 5-10x price increase in a matter of minutes
-Switchboard and Pyth oracles updated their MNGO benchmark price to $0.15+
-The value of the account that was long MNGO-PERP increased from the unrealized profit
-account borrowed and withdrew BTC (sollet), USDT, SOL, mSOL, USDC out of the Mango protocol
-This maxed out the borrows available from the $190M equivalent deposits on the platform
In the end, Avraham Eisenberg risked $10M to profit upwards of $100M from the advanced market manipulation trades. As the saint he is, Avraham returned $67M in stolen funds, keeping $48M as “bug bounty.”
This isn’t exactly his first round in exploiting DeFi protocols for his own gain. Avraham Eisenberg started Fortress DAO early this year, and committed some of the same atrocities we saw with Mango.
A short time after launching, it was evident that Fortress DAO was a failed project due to lack of management from the founding team. The community eventually began demanding redistribution of the projects treasury. Before changes were proposed, the team converted half of the treasury’s stables to FUSD, amounting to $6M. At the same time, the Discord servers were down for a couple of hours.
Following this, a proposal for redemptions was published on snapshot, and was overwhelmingly approved. The redemption process began and should have ended at 25.02, in order to convert all remaining assets into FUSD.
However, Avraham Eisenberg had different plans. After the redemption process started, Avraham allowed bonding with the project’s native token, minting 190M FUSD by looping FUSD as collateral for minting. Then, he proceeded to set the bonding price at $7.5, nearly 40% under the backing price. Therefore, no-one bonded.
The bonding price was continually lowered, and once it hit $6, he bonded $50K sFUSD from his wallet. The price of FORT began to crash, since there was no point in holding a token which somebody can acquire for much cheaper. The mayhem continued until bonding price hit around $1.5, 10 times lower than the original backing price.
Finally, Avraham sent 20M FUSD and 1M USDC to his wallet, emptying the FUSD multisig. Avraham successfully ran off with $14M in assets, and 20M FUSD.
Avraham then raised the bonding price to $15, allowing the price to recover a bit before again lowering the bonding price to $1.5, and this time around he bonded a metric ton of FUSD to acquire 700K FORT, with the total supply of the token being only 1M.
As if it couldn’t get any worse, Avraham then began writing his own proposal for the protocol, with majority voting power in the project. All in all, Avraham extracted about $14M from the redemption process, leaving holders with just 7% the amount they should have received.
This was the money Avraham then used to exploit Mango Markets.
The malicious intent of Avraham Eisenberg thankfully did not go unnoticed by authorities, but the case also brought up some interesting revelations in the regulatory eye of crypto.
The official charges against Eisenberg are commodities fraud and market manipulation for his antics. These offenses are punishable with a maximum sentence of 25 years, including a hefty fine.
With the arrest of Sam Bankman-Fried and Avraham Eisenberg, 2022 is shaping up to be a big year of justice for some of the largest fraudsters and offenders in DeFi.