Avraham Eisenberg, the hacker behind the $114 million attack on Mango Markets, confirmed in a statement today that he orchestrated the attack on the DeFi platform.
While leaving the question of how big his team was, Eisenberg made the following statement:
“Last week I was part of a team that was running a very profitable trading strategy.
Even though the dev team did not fully anticipate all the consequences of adjusting the parameters in its current form, I believe that all our actions are legitimate open market actions, using the protocol as designed.”
I believe all of our actions were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are.
— Avraham Eisenberg (@avi_eisen) October 15, 2022
Hacker Eisenberg Withdraws $114M After Investing $10M in Mango Markets Platform
This legal trading strategy required Eisenberg to spend $10 million to pull $114 million from Mango Markets.
The “Trade” in question worked by manipulating the price oracle to triple the price of the Mango token from $0.30 to $0.91. This increased the value of Eisenberg’s collateral, allowing him and his team to receive more funding from the protocol.
Eisenberg’s name was only associated with the attack a day later. Independent reporter Chris Burnet published an article offering some evidence linking Eisenberg to the attack. Evidence included leaked screenshots of Discord chats describing the planned attack and suspicious activity on-chain after the incident.
This isn’t the first time Eisenberg has been associated with a DeFi attack. Earlier this year, FortressDAO was accused of defrauding investors of $14 million.
Mango Markets Bankrupt After $114 Million Altcoin Withdrawal
The attack bankrupted Mango Markets due to the protocol’s failure to repay the debt, and its user positions were in danger of being liquidated. Eisenberg drew attention to this in his statement and said that he helped close a deal with the DeFi platform.
The Mango community voted today to have Eisenberg retain $47 million and return the remaining $67 million to the project. The returned funds will be used to recapitalize the exchange. Thus, bad debts caused by the attack will be closed.
Eisenberg is worth about $8 million shortly after the voting began, according to on-chain data. altcoin paid back. According to the details of the deal revealed in the voting, this initial refund was considered a demonstration of Eisenberg’s goodwill.
The remaining funds were also refunded to Mango Markets via both Solana and Ethereum. This amount consists of $48 million in SOL, $10 million in USDC and $90,000 in GMT.
Eisenberg Will Keep $47 Million Under The Deal
$47 million to be held by Eisenberg cryptocurrency has been the subject of debate in the field. This amount is larger than the usual rewards that hackers demand in exchange for the affected platform not filing any criminal charges.
Other hackers have made deals to keep up to 10% of the loot. In Eisenberg’s case, he and his team will hold more than 40% of the funds. Taking into account the $10 million used to launch the attack, the team’s effective payout from the bounty would be approximately $37 million.
According to Eisenberg, this deal is not out of the ordinary. “This is similar to how automated leverage works on exchanges like Binance and Bitmex, taking back some profits from profitable investors to ensure all user funds are protected,” he said.
Auto leverage is one of the ways stock markets manage risk during periods of high volatility. It is used by exchanges as a last resort when insurance funds cannot cover a bankrupt user’s position.
In a statement made today, it was also confirmed that Eisenberg accepted the $47 million prize. The award forms part of an agreement between the Mango community and Eisenberg that Mango will not take any legal action.
It is not yet clear whether law enforcement will see this agreement as legally binding.
Eisenberg made a bet on Twitter earlier today that he would not be charged with any crime by the end of 2023.
*Not investment advice.
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