Financial Crime World

Alleged Crypto Fraudster Avraham Eisenberg of Puerto Rico Charged with $110M Scheme

A 27-year-old man from Puerto Rico, Avraham Eisenberg, is set to appear at the federal courthouse in Manhattan today for his initial hearing. Eisenberg is accused of orchestrating a complex cryptocurrency scam worth approximately $110 million.

Charges Against Avraham Eisenberg

  • Avraham Eisenberg faces charges of:
    • Commodities fraud
    • Commodities market manipulation
    • Wire fraud
  • The alleged offenses are connected to manipulating prices on the decentralized cryptocurrency exchange, Mango Markets.

Arrest Announcement

  • The U.S. Department of Justice (DOJ) announced Eisenberg’s arrest on Dec. 26, 2022, in San Juan, PR.
  • Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division condemned the exploitation of decentralized finance platforms as “old-school financial crimes.”

Background of Mango Markets

  • Mango Markets is a decentralized cryptocurrency exchange offering investors various opportunities to buy, borrow, and trade cryptocurrencies and related financial products.
  • The exchange is managed by the Mango Decentralized Autonomous Organization (Mango DAO).
  • Users can purchase and trade its native crypto token, MNGO, which holds voting power on platform alterations and DAO governance issues.

Accusations Against Eisenberg

  • U.S. Attorney Damian Williams for the Southern District of New York says that Eisenberg is accused of manipulating Mango Markets to make over $100 million in illicit profits.
  • He allegedly schemed to artificially manipulate the prices of certain perpetual futures contracts.

FBI’s Involvement

  • The Federal Bureau of Investigation (FBI) is committed to enforcing the criminal justice system and ensuring the integrity of financial markets, including cryptocurrency markets.
  • The organization is currently leading the investigation alongside Homeland Security Investigations and IRS Criminal Investigation.

Charges and Penalties

  • Eisenberg is currently charged with:
    • One count of commodities fraud
    • One count of commodities manipulation
    • One count of wire fraud
  • If convicted, he may face a maximum of 10 years in prison for the fraud and manipulation charges and up to 20 years for the wire fraud charge.

Parallel Civil Proceedings

  • The Commodity Futures Trading Commission and the Securities and Exchange Commission have also initiated parallel civil proceedings.

Handling of the Case

  • The case is being handled by the National Cryptocurrency Enforcement Team (NCET) Trial Attorney Jessica Peck and Assistant U.S. Attorneys Thomas Burnett and Noah Solowiejczyk for the Southern District of New York.

Importance of the Case

  • An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty in a court of law.

National Cryptocurrency Enforcement Team (NCET)

  • The NCET was established under the Criminal Division to focus on combating the illicit use of cryptocurrencies and digital assets, targeting virtual currency exchanges, mixing and tumbling services, and infrastructure providers among other entities.