Justice Department’s First Cryptocurrency Open-Market Manipulation Case
Damian Williams, the United States Attorney for the Southern District of New York; Nicole M. Argentieri, the Principal Deputy Assistant Attorney General and head of the Justice Department’s Criminal Division; Timothy Langan, the Executive Assistant Director of the Criminal, Cyber, Response, and Services Branch of the Federal Bureau of Investigation (“FBI”); and James Smith, the Assistant Director in Charge of the New York Field Office of the FBI, announced the conviction of AVRAHAM EISENBERG of commodities fraud, commodities market manipulation, and wire fraud in connection with manipulation on the Mango Markets decentralized cryptocurrency exchange. EISENBERG was found guilty following a 10-day jury trial before U.S. District Judge Arun Subramanian.
U.S. Attorney Damian Williams said: Avraham Eisenberg was found guilty by a unanimous jury in the first-ever cryptocurrency market manipulation case. This ground-breaking prosecution epitomizes this Office’s ability to employ innovative methods and cutting-edge law enforcement tools to continue to protect all financial markets. The career prosecutors of this Office continue their expertise in prosecuting financial fraud, one of our core priorities, and would-be financial criminals should think twice before daring to engage in illicit conduct on our watch.
Principal Deputy Assistant Attorney General Nicole M. Argentieri said: “Avraham Eisenberg executed a manipulative trading scheme on a cryptocurrency exchange, defrauding the exchange and its investors out of $110 million. 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 U.S. financial markets and holding wrongdoers accountable, no matter what mechanism they use to commit manipulation and fraud.”
FBI Executive Assistant Director Timothy Langan said: “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.”
FBI Assistant Director in Charge James Smith said: “With today’s conviction, Avraham Eisenberg now rightly faces justice for his duplicitous manipulation of virtual currencies on the Mango Markets exchange. The FBI will continue to ensure that any individual attempting to scheme and take advantage of financial markets, whether traditional or emerging, for personal gain be held accountable.”
According to court documents and evidence presented at trial:
EISENBERG engaged in a scheme to fraudulently obtain approximately $110 million worth of cryptocurrency from Mango Markets and its customers by artificially manipulating the price of certain perpetual futures contracts.
EISENBERG, 28, of Puerto Rico, was convicted of commodities fraud, which carries a maximum penalty of 10 years in prison; commodities manipulation, which carries a maximum penalty of 10 years in prison; and wire fraud, which carries a maximum penalty of 20 years in prison.
The statutory maximum penalties in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. EISENBERG is scheduled to be sentenced on July 29, 2024.
Mr. Williams praised the investigative work of the FBI and further thanked Homeland Security Investigations and the Internal Revenue Service – Criminal Investigation for their assistance.
The case is being prosecuted by the Office’s Securities and Commodities Fraud Task Force and the Criminal Division’s Computer Crime and Intellectual Property Section’s National Cryptocurrency Enforcement Team (“NCET”). Assistant U.S. Attorneys Thomas Burnett and Peter Davis and Trial Attorney and Special Assistant U.S. Attorney Tian Huang of the Criminal Division’s Fraud Section, a member of the NCET, are in charge of the prosecution, with assistance from Paralegal Specialists Ryan Sears and Jonathan Oshinsky.
The NCET was established to combat the growing illicit use of cryptocurrencies and digital assets. Within the Criminal Division’s Computer Crime and Intellectual Property Section, the NCET conducts and supports investigations into individuals and entities that are enabling the use of digital assets to commit and facilitate a variety of crimes, with a particular focus on virtual currency exchanges, mixing and tumbling services, and infrastructure providers. The NCET also works to set strategic priorities regarding digital asset technologies, identify areas for increased investigative and prosecutorial focus, and lead the Department’s efforts to collaborate with domestic and foreign government agencies as well as the private sector to aggressively investigate and prosecute crimes involving cryptocurrency and digital assets.
