Welcome to the inaugural edition of Financial Crime Weekly. Each Friday, we’ll be jumping into the labyrinthine world of scams and schemes to provide insights into the extraordinary happenings of the financial sector.
This week, our focus is on 27-year-old Avraham “Avi” Eisenberg, a Puerto Rican resident who is embroiled in a high-profile federal case involving cryptocurrencies, commodities fraud, and most recently, an alleged discovery involving child pornography.
The Allegations: In January 2023, Eisenberg was arrested by federal prosecutors on a slew of charges that include commodities fraud, commodities market manipulation, and wire fraud.
According to the Department of Justice (DOJ), Eisenberg is accused of tampering with the decentralized cryptocurrency exchange ‘Mango Markets,’ resulting in a fraud that cost the exchange and its clients approximately $114 million.
“Mango Markets is a decentralized cryptocurrency exchange run by the Mango Decentralized Autonomous Organization (the Mango DAO),” according to the DOJ. It allows for the purchase, sale, and borrowing of various cryptocurrencies and crypto-related financial products.
The Securities and Exchange Commission (SEC) also charged Eisenberg.
The SEC alleges that Eisenberg orchestrated “an attack on a crypto asset trading platform, Mango Markets.” The crypto trader artificially inflated the price of the Mango token (MNGO/USD), a governance token offered and sold as a security, to borrow and then drain nearly all available assets from Mango Markets, according to the SEC.
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After being arrested initially in Puerto Rico last year, Eisenberg admitted to the exploit, but claimed that his "actions were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are."
Of the $114 million exploited, he returned $67 million, saying that he "wanted to ensure [that] other users weren't hurt."
If convicted, Eisenberg could face up to 10 years in prison for each commodities-related charge and a maximum of 20 years for wire fraud. The charges are being prosecuted by both the DOJ and the SEC, which have initiated parallel civil proceedings.
Eisenberg's case took an even darker turn last Friday when the FBI alleged that it discovered child pornography on Eisenberg’s phone. The FBI said that while it was extracting data from his phone, its Computer Analysis and Response Team (CART) "observed that the device contained child pornography."
The FBI applied for, and obtained, a second warrant to expand the scope of the original warrant to "search for evidence of offense related to the possession and receipt of child pornography."
If convicted, those crimes carry a mandatory sentence of five years in prison.
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Photo: Shutterstock
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