• Mango Labs LLC has filed a lawsuit against the trader who reportedly made $114 million in 20 minutes by fraudulently manipulating the price of its cryptocurrency tokens on its exchange in October.
• The SEC has also filed a complaint in the Southern District of New York, claiming that the individual purchased a significant volume of purported “perpetual futures” contracts.
• Mango Labs is now demanding the remaining funds from the hacker, and is also seeking damages and other relief.
Mango Markets, a DeFi platform based in Solana that trades digital assets for spot margin and trading perpetual futures, was the target of an exploit hack in October 2022. The hacker, Avraham Eisenberg, was able to manipulate the DeFi protocol’s collateral and steal more than $100 million from Mango Markets, as well as obtaining a substantial amount of loans from the Mango Treasury. This caused a substantial loss to the Mango Treasury, and the price of MNGO tokens fell to just 2 cents.
In response, Mango Labs LLC has filed a lawsuit against Eisenberg on January 25, in a federal action. The company claimed that the hacker has consented to repay $67 million of the illegally obtained assets. However, Mango Labs is now demanding the remaining funds from the hacker, as well as seeking damages and other relief.
The SEC has also filed a complaint in the Southern District of New York, claiming that Eisenberg purchased a significant volume of purported “perpetual futures” contracts from Mango Markets and then used the leverage to drive up the price of the swap by 1300%. As a result, he was able to make a profit of $114 million in just 20 minutes, which led to Mango Markets suspending operations the day after the incident.
The lawsuit filed by Mango Labs alleges that the hacker breached his duty of good faith and fair dealing with Mango Markets, as well as violated several securities laws. The suit also argues that the hacker committed fraud, unjust enrichment, and misappropriation. If the lawsuit is successful, Mango Labs will be able to recover the funds stolen from them and obtain damages from the hacker.
At the same time, the SEC and the Commodity Futures Trading Commission (CFTC) are also suing Eisenberg for violating the Commodity Exchange Act and other federal securities laws. The SEC is seeking disgorgement of all ill-gotten gains, civil penalties, and injunctive relief. The CFTC is also seeking disgorgement and civil monetary penalties.
It remains to be seen what the outcome of the lawsuit will be, and Mango Markets will continue to investigate the hack to ensure that similar incidents do not occur in the future. In the meantime, the company is warning other crypto exchanges to take steps to protect their platforms from similar attacks.