In a recent press release, the Commodity Futures Trading Commission (CFTC) announced a civil enforcement action charging an individual with a fraudulent and manipulative scheme to unlawfully obtain over $110 million in digital assets from a decentralized digital asset (DeFi) exchange, marking the first enforcement action against an exchange of this type. The CFTC alleges that the individual used "oracle manipulation" to misappropriate over $110 million in digital assets by creating two anonymous accounts on the DeFi exchange to artificially pump the price of the DeFi exchange's underlying token, MNGO. According to the press release, the individual rapidly purchased substantial quantities of MNGO on three separate exchanges that were "oracles" (oracles provide decentralized exchanges with a data feed to determine the value of assets based off a larger input of data). As a result, the price of MNGO jumped thirteen times its previous value for a short period of time, resulting in an artificial inflation of value, at which time the individual then sold MNGO. The individual has also been charged by the U.S. Department of Justice.
According to a recent report, a novel method of service has been used by the court-appointed liquidators in a major cryptocurrency hedge fund case; they tweeted subpoenas to the founders "requesting that they produce documents and information for the recovery of assets as part of bankruptcy proceedings in New York and the British Virgin Islands." Lack of cooperation from the founders has made it difficult for the court to engage them in the bankruptcy proceedings, but the report notes that they "frequently post on Twitter and occasionally make media appearances." The U.S. Bankruptcy Judge approved the service of the subpoenas through email and a redacted version on Twitter given the lack of cooperation in the case.
For more information, please refer to the following links:
- CFTC Charges Avraham Eisenberg with Manipulative and Deceptive Scheme to Misappropriate Over $110 million from Mango Markets, a Digital Asset Exchange
- 3 Arrows Liquidators Serve Crypto Fund's Founders Via Tweet
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