Eisenberg called the exploit “profitable trading strategies” and claimed that his actions were legal. According to the Mango exploiter, the agreement to return a portion of the loot was not different from auto-deleveraging on exchanges. As required by the governance vote, he has returned the funds.
Avraham Eisenberg is the man behind the $114 million Mango Markets scam. He has now confirmed that he was responsible for the attack on DeFi’s platform in a statement published today.
Eisenberg said, “I was involved in a team which operated a highly profitable trade strategy last week.” He also confirmed that all his actions were legal open-market actions. Even though the development team didn’t fully anticipate all the consequences, Eisenberg refused to discuss the size of his team when The Block asked him.
To drain $114million from Mango Markets, Eisenberg had to use a legal trading strategy. The “trade” involved manipulating the price Oracle to increase the mango token’s price by threefold, from $0.30 to $0.91. This increased Eisenberg’s collateral and allowed him and his team access to more funds through the protocol.
Eisenberg’s name was mentioned a few days after the attack. Chris Burnet , an independent reporter, published a piece that provided evidence linking Eisenberg to the attack. Leaked screenshots from Discord chats that described the attack and suspicious on-chain activities were some of the evidence. Eisenberg isn’t the first to be linked with a DeFi exploit. He was also accused earlier this year of defrauding FortressDAO investors of up to $14 million.
Mango Markets was left insolvent after the attack. User positions were in danger of being liquidated as the protocol couldn’t repay the unpaid debt.
Eisenberg made this clear in his statement, and claimed that he was involved in the negotiation of a DeFi deal. Today’s vote by the Mango community allowed Eisenberg to keep $47 million and return $67 million to DeFi. The exchange will be recapitalized with the funds that have been returned. The exploit-related bad debt can then be paid.
According to on-chain data, Eisenberg paid back around $8 million in tokens within a matter of minutes. The details of the deal, as captured in the vote show that this is Eisenberg’s first repayment.
Mango Markets has also received the remaining funds, on Solana as well as on Ethereum. These funds include $48 million in SOL, $10 millions of USDC, and $90,000.00 of GMT.
In the crypto space, Eisenberg’s $47 million has been under scrutiny. The amount is higher than usual rewards offered by hackers in return for the platform not being prosecuted. Others have made deals to retain as much as 10% of the loot. Eisenberg and his team will retain over 40% of the loot. The team will receive a $37 million payout after accounting for the $10 million spent on launching the attack.
Eisenberg said that the deal is not unusual. Eisenberg said that the deal is similar to auto deleveraging on exchanges like Binance or Bitmex. It involves grabbing some profits from profit-making traders to ensure all user funds are protected. One way exchanges manage volatility is through auto deleveraging. When insurance funds are not available to cover the position of a bankrupt user, exchanges may use auto deleveraging as a last-ditch solution.
Today’s statement confirms Eisenberg’s acceptance of the $47million bounty. The Mango community and Eisenberg have reached an agreement that the bounty will not be pursued. This arrangement is not legally binding. It remains to see if law enforcement officials will accept it.
Eisenberg mentioned earlier today that he had placed a wager on Twitter to ensure that he would not be charged with any crime by 2023.