Mango Labs Sues Hacker For $47M in Damages

Mango Labs aims to recover $47 million from the hacker Avraham Eisenberg. The protocol negotiated to give Eisenberg a $47 million bounty for returning the drained funds.

Mango Labs, the company behind decentralized finance (DeFi) protocol Mango Markets, has filed a lawsuit against exploiter Avraham Eisenberg. Einseberg exploited the platform to acquire multi million-dollar cryptocurrencies in October 2022, according to documents filed Jan. 25 with the U.S. District Court for the Southern District of New York.

It is seeking $47 million in damages and interest from the time of the attack. It also asked the court to revoke an agreement between Eisenberg and Mango’s associated decentralized autonomous organization (DAO), declaring it void and unenforceable. The agreement was in relation to a governance proposal put forward by Eisenberg, which required the DAO to allow them to keep the $47 million and stipulated that Mango Markets wouldn’t pursue criminal charges for draining its treasury.

Through this legal action, Mango Labs aims to recover all tokens, including the $47 million bounty. They believe Mango DAO voted for Eisenberg’s proposal because they “didn’t have a choice.”

The Mango Markets community criticized the behavior on Discord. The disappointed community called the team “men without honor” and added that “hurting other people will not increase the token price.”

The Case of Mango Labs vs Avraham Eisenberg

On October 11, 2022, an attacker drained approximately $117 million from Mango Markets treasury by manipulating price oracle data for the native Mango (MNGO) token, which allowed them to obtain undercollateralized loans. Afterwards, Eisenberg publicly stated that he was the attacker. He claimed the exploit was a “highly profitable trading strategy” and a “legal open market practice utilizing the design protocol.”

Eisenberg was arrested in Puerto Rico on December 27 and charged by the FBI with fraud and merchandise manipulation for hacking the platform. The Commodity Futures Trading Commission (CFTC) investigated the FBI’s allegations on Jan. 9 and convicted Eisenberg of two counts of market manipulation.

On January 20, the U.S. Securities and Exchange Commission (SEC) further accused Eisenberg of violating the anti-fraud and market manipulation provisions of the US securities laws.

Mango Labs’ lawsuit states that Eisenberg is “a notorious online personality” with a “history of attacking multiple cryptocurrency platforms and manipulating cryptocurrency markets.”