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Avi Eisenberg has been unanimously convicted by a jury in the first cryptocurrency open-market manipulation case prosecuted by the US Department of Justice, as announced on Thursday.

The jury’s verdict found Eisenberg guilty of commodities fraud, commodities market manipulation, and wire fraud related to the manipulation carried out on Mango Markets, a decentralized cryptocurrency exchange.

Scheduled for sentencing on July 29, Eisenberg faces a maximum penalty of 10 years in prison for commodities fraud and commodities manipulation, and up to 20 years for wire fraud, according to the DOJ.

Operating on the Mango Markets platform, Eisenberg orchestrated a fraudulent scheme to illicitly acquire approximately $110 million worth of cryptocurrency from both Mango Markets and its users by artificially inflating the price of specific perpetual futures contracts. This manipulation not only affected traders but also led to the exchange’s insolvency, forcing it to halt operations.

Nicole M. Argentieri, the principal deputy assistant attorney general overseeing the DOJ’s criminal division, emphasized the risks posed by Eisenberg’s manipulative trading activities to financial markets and investors.

The lawsuit filed by Mango Labs against Eisenberg for price manipulation has been put on hold pending the resolution of the DOJ’s case. The company is currently awaiting an update from the US government to proceed with its legal action.

Eisenberg’s legal representative, Brian Klein, expressed disappointment with the verdict but affirmed their commitment to continuing to advocate for Eisenberg’s defense.

Operational Details of the Mango Markets Scheme

Mango Labs has accused Eisenberg of being a “notorious cryptocurrency market manipulator,” citing previous instances of market attacks and manipulation. One such incident involved an alleged embezzlement of $14 million in 2021 while Eisenberg was employed at Fortress, another decentralized marketplace.

The manipulation scheme on Mango Markets aimed to generate substantial profits through price manipulation. By exploiting the mechanics of the platform, Eisenberg engaged in a series of transactions involving perpetual futures contracts of the MNGO cryptocurrency. This activity artificially inflated the prices of both the cryptocurrency and the perpetuals, resulting in a significant surge in value within a short period.

Eisenberg’s actions led to the withdrawal of approximately $110 million in various cryptocurrencies from Mango Markets, primarily sourced from deposits made by other investors. This depletion severely impacted the exchange, causing the collapse of the MNGO perpetual prices.

Despite facing legal challenges and regulatory scrutiny, Eisenberg defended his actions on social media, characterizing them as legitimate trading strategies within the open market framework. However, critics pointed out ethical concerns regarding his tactics and the adverse effects on the protocol’s financial stability.

The DOJ’s successful prosecution of Eisenberg underscores its commitment to combating cryptocurrency-related financial crimes, particularly those involving market manipulation. This case adds to a series of recent convictions and arrests targeting individuals engaged in fraudulent activities within the crypto space, signaling a proactive stance against such offenses.