Prosecutors seek 8-year sentence for Mango Markets' exploiter Avi Eisenberg

U.S. prosecutors of the Southern District of New York have requested the district judge to sentence a prison term of 78 to 97 months for Mango Markets exploiter Avraham "Avi" Eisenberg , according to a filing submitted on Tuesday.

"This sentence is necessary to, among other things, appropriately reflect the gravity of the defendant’s crimes, promote respect for the law, deter the defendant from future criminal activity, and protect the public," the prosecutors said in the letter sent to the U.S. District Judge Arun Subramanian.

Eisenberg was convicted of executing a manipulative scheme on DeFi platform Mango Markets to exploit $110 million in 2022. Charges of possessing and viewing illicit material involving minors were added after law enforcement reviewed his electronic devices.

According to the filing, Eisenberg executed large perpetual futures trades of MNGO between two accounts he controlled and then used falsely created accounts on FTX, AscendEx and Serum to inflate MNGO's value relative to USDC. As the settlement price of his "long" MNGO perpetual positions skyrocketed, Eisenberg borrowed large amounts of crypto using the inflated value of his account from the platform, and then dumped MNGO, causing it to plummet. This again allowed him to borrow more crypto from Mango as his "short" perpetual position rose in value, without the intent of repaying the loans.

This wiped out depositor holdings and left the platform temporarily insolvent. Mango Markets continued to operate until it announced closure earlier this year.

The 29-year old previously pushed back against fraud charges, arguing that his actions were part of a legal group-trading strategy that used the protocol "as designed."

However, the prosecutors insist that Eisenberg knew that his actions were illegal, listing his previous actions where he sued another individual for price manipulation, posting online about federal charges for market manipulation, and the fact that he fled the country "as soon as" he saw social media posts circulating about the Mango Markets exploit.

Months after the exploit, Eisenberg returned $67 million from the exploited funds to Mango Markets, while the protocol's community allowed him to keep $47 million in a governance vote.

"In reality, the defendant knew he had committed a crime and had tried to conceal his involvement, coming forward only after others had identified him and he had both fled the country and received what he believed were promises from the Mango DAO that they would not make the case criminal," the filing said.

Earlier this week, Mango Labs, the platform behind Mango Markets, requested the court for a restitution to recover $47 million in misappropriated funds from Eisenberg to help make victims on the platform "whole."

"No amount of money will fix the damage that Eisenberg has caused to Mango Markets’ reputation and the suffering his avarice caused, but returning the money Eisenberg made off with will at least help," Mango Labs said.

Originally set for December 2024, Eisenberg's sentencing was delayed multiple times and is now scheduled for May 1.

The Block reached out to Eisenberg's defense team for comment.