- CFTC sues crypto trader Avraham Eisenberg for $114 million crypto swaps scam.
- Eisenberg manipulated prices of swaps offered by Mango Markets and withdrew $114 million of cryptocurrency.
- CFTC seeks penalties and trading bans, it shows growing regulatory scrutiny of crypto activities in US.
The US Commodity Futures Trading Commission (CFTC) has filed a lawsuit against crypto trader Avraham Eisenberg, accusing him of falsely manipulating the prices of swaps contracts as part of a scam to steal $114 million worth of funds from the decentralized digital-asset exchange, Mango Markets.
The regulator claims that Eisenberg perpetrated a "manipulative and deceptive scheme" in October by inflating the prices of swaps offered by Mango Markets, ultimately leading to the misappropriation of funds from other investors on the exchange.
According to the complaint, Eisenberg allegedly used two Mango Markets accounts that he controlled to manipulate the price of perpetual swaps, pushing up their price by 1,300% in a matter of minutes. He then used the inflated swaps as collateral to borrow and withdraw about $114 million worth of cryptocurrencies.
Eisenberg was arrested in Puerto Rico last month and charged with fraud by prosecutors in New York over the exploit. At one point it appeared that he was walking away with about $50 million worth of digital assets after the attack, but he defended his actions as legal in the aftermath of the incident.
The CFTC is now seeking civil monetary penalties and trading bans against Eisenberg for his alleged actions. The Mango Markets incident was one of a number of hacks that have hit decentralized finance over the past year, adding to a period of ignominy for crypto amid a $2 trillion rout in digital assets.
This is similar to the incident of the implosion of the FTX exchange which led to the arrest of Sam Bankman-Fried . This lawsuit by CFTC is a strong indication of the increasing regulatory scrutiny of crypto activities in US.