Title: Puerto Rico Resident Convicted of $110 Million Cryptocurrency Fraud Scheme: A Historic First for US Justice Department

Manhattan Federal Jury Returns Guilty Verdict against Avraham Eisenberg

Avraham Eisenberg, a 28-year-old resident of Puerto Rico, was found guilty by a Manhattan federal jury on charges of commodities fraud, commodities market manipulation, and wire fraud. The charges were related to manipulating the prices on the Mango Markets decentralized cryptocurrency exchange, leading to the loss of approximately $110 million in cryptocurrency.

Details of the Manipulative Trading Scheme

According to the indictment and evidence presented during the trial, Eisenberg devised a deceptive plan to defraud Mango Markets and its investors by falsely influencing the value of specific perpetual futures contracts.

Principal Deputy Assistant Attorney General’s Statement

Upon the conclusion of the trial, Principal Deputy Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division made the following statement:

“Avraham Eisenberg masterminded a manipulative trading scheme on a cryptocurrency exchange, cheating the exchange and its investors out of $110 million. Manipulative trading jeopardizes our financial markets and endangers investors. This landmark case—marking the first-ever prosecution of cryptocurrency manipulation through open-market transactions—epitomizes the Criminal Division’s determination to safeguard U.S. financial markets and ensure accountability for wrongdoers, regardless of the mechanisms they employ for manipulation and deceit.”

U.S. Attorneys’ Statement

U.S. Attorney Damian Williams for the Southern District of New York and Manhattan U.S. Attorney Audrey Strauss added in a joint statement:

“Eisenberg was unanimously found guilty by a jury in a groundbreaking case—the inaugural prosecution of cryptocurrency open-market manipulation. Our office consistently showcases its innovative prowess and cutting-edge law enforcement technologies to safeguard all financial markets. Career prosecutors remain dedicated to combating financial fraud, one of our top priorities, and prospective wrongdoers are advised to reconsider engaging in illicit conduct under the watchful eyes of our team.”

FBI’s Response

Executive Assistant Director Timothy Langan of the FBI’s Criminal, Cyber, Response, and Services Branch expressed:

“The FBI and our collaborators do not tolerate criminal activities that harm American people and our financial institutions in the name of profit. If you engage in fraudulent activities, be it in the realm of cryptocurrencies or through other methods of market manipulation, be prepared to face the consequences of your actions.”

Consequences and Sentencing

Eisenberg is scheduled to be sentenced on July 29, 2023. He faces a maximum penalty of ten years in prison on the commodities fraud count and the commodities manipulation count, as well as a potential term of up to 20 years for wire fraud. A federal district court judge will ultimately determine the sentence, taking into account the U.S. Sentencing Guidelines and other statutory considerations.

Assistance from Law Enforcement Agencies

During the investigation, the FBI enlisted the assistance of Homeland Security Investigations and IRS Criminal Investigation. The prosecution is being handled by Trial Attorney and Special Assistant U.S. Attorney Tian Huang from the Criminal Division’s Fraud Section, a member of the National Cryptocurrency Enforcement Team (NCET), and Assistant U.S. Attorneys Thomas Burnett and Peter Davis for the Southern District of New York.

NCET’s Role

The establishment of the National Cryptocurrency Enforcement Team (NCET) within the Criminal Division’s Computer Crime and Intellectual Property Section aims to combat the escalating problem of illicit cryptocurrency use. The NCET conducts and supports investigations into individuals and entities leveraging digital assets to perpetrate a range of crimes, with a particular emphasis on virtual currency exchanges, blending and tumbling services, and infrastructure providers.