The hacker, who stole $117 million from Mango Markets, a Solana-based decentralized exchange (DEX), argued that all his actions were legal, but his lawyer says they may still face some consequences.
Avraham Eisenberg, who describes himself as a digital art dealer, exposed himself as a cyber attacker in a thread he shared on Twitter on October 15th. Eisenberg claimed that he and his team had “captured a high-yielding investment strategy, by which they carried out “lawful open market actions using the protocol deliberately.”
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
The cyberattack carried out by Eisenberg and his team on October 11 manipulated the value of the shared collateral of the platform’s native token, MNGO, with higher prices. He then took out substantial loans against the inflated collateral that emptied Mango’s treasury.
“Had this occurred in the regulated financial market, it would probably have been considered market manipulation,” Michael Bacina, partner at Australian-based law firm PiperAlderman, explained to Cointelegraph.
“Manipulation is the cousin of misinterpretation, and in many jurisdictions, misleading and deceptive behavior sets the stage for illegal and legal claims,” Bacina added.
Eisenberg committed to “reimbursement of funds to all users,” and negotiations between him and the Mango Decentralized Autonomous Organization (DAO) allowed Eisenberg to keep $47 million as “reward for error,” while the remainder was returned to the Mango treasury.
As part of the offer, the commitment stipulates that MNGO token holders will not “take any legal action and freeze funds” once Eisenburg sends the remaining amount.
But Bacina said it was “unlikely” for Eisenburg to absolve himself of all responsibility, including those who voted for the proposal, given the “weak” text of the proposal.
“The wording of the offer is weak and, under certain circumstances, the offer to be released is questionable.”
Bacina said that while any legal claims would be deducted from the amount a member received because of the offer, there may be “limited commercial incentive” to sue Eisenburg.
“Assuming that claims survive the offer, the claim would have to be deducted by any amount taken back by a member because of the offer. “This means that members have limited commercial incentive to sue Eisenburg.”
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A portion of the $67 million returned to the platform will be reimbursed to users as part of DAO-approved reimbursement.
Cointelegraph contacted Eisenberg for comment but did not receive an immediate response.