Trader convicted in landmark $110M crypto fraud case

Judges hammer on top of US flag.
Credit: Mahambah, Shutterstock

A federal jury in New York has convicted Avraham Eisenberg, a cryptocurrency trader, of fraud in connection with a $110m market manipulation case.

This case marks the Justice Department’s first cryptocurrency open-market manipulation case. Eisenberg engaged in a scheme to fraudulently obtain approximately $110m worth of cryptocurrency from Mango Markets and its clients by artificially inflating the price of specific perpetual futures contracts.

According to prosecutors, Eisenberg used two accounts to execute simultaneous buy and sell orders for futures contracts, leveraging the relative values of Mango’s token MNGO and the USD Coin stablecoin.

Attorney General Nicole M. Argentieri, Head of the Justice Department’s Criminal Division, said: “Manipulative trading puts our financial markets and investors at risk. 

“This prosecution – the first involving the manipulation of cryptocurrency through open-market trades – demonstrates the Criminal Division’s commitment to protecting US financial markets and holding wrongdoers accountable, no matter what mechanism they use to commit manipulation and fraud.” 

Eisenberg is set for sentencing on 29 July, where he could receive a maximum of 10 years in prison for each count of commodities fraud and commodities manipulation, and up to 20 years for the charge relating to wire fraud. 

The FBI led the investigation, receiving support from Homeland Security Investigations and IRS Criminal Investigation.

Timothy Langan, Executive Assistant Director of the FBI’s Criminal, Cyber, Response, and Services Branch, stated: “The FBI and its partners will not stand by when criminals engage in illicit activity at the expense of the American people and our financial institutions. 

“If you engage in fraudulent activity, whether that be in the cryptocurrency space or through other forms of market manipulation, you will be held accountable for your ill-gotten gains.”

Crypto has been on the rise in 2024, resulting in a rise of regulatory discussions around the world. In the US, KuCoin found itself in troubled waters, becoming the subject of a US government indictment for violations of the Bank Secrecy Act (BSA).

Whereas over the pond, the UK government revealed legislative plans prepared covering cryptocurrencies earlier this month, as the current government continues on its mission to build a ‘Digital Britain’.