The Mango DAO reportedly ‘died’ last week after John Kramer and Max Schneider gained significant voting control while also allegedly violating a settlement with the Securities and Exchange Commission (SEC).

The pair successfully completed a proposal last Saturday to distribute 67.5 million MNGO options after locking up 80 million tokens. However, Mango Labs founder Dafydd Durairaj claims their proposal  “would likely count as a sale of MNGO and would jeopardize our settlement with the SEC.” 

He advocated against the proposal in the Mango DAO Discord, claiming, “The SEC could reopen the case, and we might face consequences from the court for violating the settlement. This puts all of us in grave jeopardy.”

The proposal also “cements their total control over the DAO,” and allows them to outvote proposals with a large majority of votes. X user @Henry_E__ posted, “RIP Mango DAO 2021-2024,” and said the pair’s proposal “marks the effective end of Mango DAO.”

In the Mango DAO discord, Schnieder claimed his request for a distribution of a “so far vested grant” shouldn’t break the SEC proposal as “This is a pre-existing agreement of the DAO, it should be honored now.”

The proposals requested 60 million and 7.5 million token options for payments it claims were due on October 4 and November 17 respectively. Schnieder also said the proposal won’t give him a voting majority and claims Durairaj is “talking nonsense to distract people and enrich yourself by breaking every promise you gave me.”

The settlement with the SEC dictates that Mango DAO, Blockworks Foundation, and Mango Labs must destroy their MNGO tokens, pay a $700,000 fine, and make sure no other platforms trade the token.

The entities neither admitted nor denied the unregistered security allegations the SEC brought against them. 

Read more: MNGO from FTX estate vote for Mango Markets buyback proposal

Schnieder and Kramer are core Mango DAO members. A lawsuit filed by Mango Labs in October accuses the pair of embezzling $10 million from the DAO during the trial of Avraham Eisenberg, another major figure in Mango’s history who was found guilty of fraudulently obtaining $110 million. 

Last October, the Mango DAO had just avoided falling foul of the SEC’s settlement after a proposal to pay the SEC fine was rejected. Fortunately, a follow-up proposal was later accepted.

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post Has Mango DAO ‘died’ while violating its SEC settlement? appeared first on Protos.

The Mango Market DAO failed to pass a proposal to pay off the Securities and Exchange Commission’s (SEC) $700,000 settlement after a major voter withdrew their vote hours before the deadline.

The proposal required 2% of participants to vote ‘yes’ so that $669,684 USD from the Mango DAO escrow account could be used to settle with the regulator.

According to X user @Henry_E__, the vote passed the 2% minimum threshold with 100 million votes. However, someone withdrew 80 million votes hours before the deadline and the vote failed to pass. Only three voters were registered by the time the deadline had passed. 

Read more: MNGO from FTX estate vote for Mango Markets buyback proposal

At this point, the vote could not be saved because, as Henry pointed out, no new ‘yes’ votes can be submitted 24 hours before the deadline. In this period, votes can only be withdrawn or submitted against the proposal. Another 52.2 million ‘yes’ votes were required for a successful verdict. 

Mango DAO still has a chance to pay the SEC

Despite the failure of this proposal, there is another vote, identical to this one, that has passed the quorum threshold with two days left until the deadline. This proposal currently has 210 million ‘yes’ votes from five voters and may result in the Mango DAO voting to pay the SEC.  

The SEC charged Mango DAO, Blockworks Foundation, and Mango Labs with various securities violations relating to unregistered offerings of MNGO and unregistered brokering. 

Last month, the SEC settled these charges. As part of the settlement, all three parties were not required to admit to or deny, the allegations put forward by the SEC. It was also agreed that all MNGO tokens would be destroyed. 

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post Mango Market DAO fails to pass vote approving $700K SEC settlement appeared first on Protos.

Mango Markets, a Solana-based decentralized exchange, has been thrust back into the public consciousness after the conviction of Avi Eisenberg for market manipulation related to an exploit of the platform.

Amid this attention, governance for Mango Markets has passed a buyback proposal that will benefit a subset of users, specifically those who have participated in governance. This proposal got over the finish line in part thanks to a large voting bloc made up of MNGO tokens recently purchased from the FTX estate. 

Several weeks ago, the FTX cold wallet began liquidating SPL tokens, including MNGO.

Following that, a new proposal was submitted to governance, that was narrowly defeated. ‘DonDuala’ shared the text of this proposal in Discord and suggested using money from the Mango Markets Treasury to repurchase MNGO in order to support the currency’s market value. 

Read more: What does Avraham Eisenberg’s ‘code is law’ defense mean for DeFi?

The funds that originally came from the FTX estate appear to have passed through a couple of intermediary addresses before being deposited into governance for Mango Markets to vote for these proposals. 

After the proposal was defeated, a new proposal was created and shared in Discord by ‘DonDuala’ that made minor changes, including allowing people who deposited but did not participate in governance to participate in the buyback. It also proposed changing the total amount of the buyback. 

This proposal narrowly passed, with the largest single voter seeming to be the tokens that trace back to the FTX estate. The subsequent ‘Distribution’ proposal is currently in voting, with significant support for approval. 

To summarize, the largest voter in favor of the proposal to use the Mango Treasury to buy MNGO tokens is someone who recently received a massive portion of MNGO from the FTX estate. This liquidity potentially makes it possible for the purchaser of these tokens from the FTX estate to begin to liquidate them. 

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post MNGO from FTX estate vote for Mango Markets buyback proposal appeared first on Protos.

As the trial of Avraham Eisenberg gets underway in the US, the legal credibility of decentralized finance (DeFi) as an autonomous financial system is at stake.

Eisenberg is accused of fraud after extracting around $112 million from the Mango Markets protocol in 2022.

The implications of the case are very different from the trial of Sam Bankman-Fried, which didn’t set any new precedents; fraud and money laundering are always illegal.

Yesterday, during opening statements, Eisenberg’s lawyer argued that Mango Markets worked as designed and that Eisenberg simply “executed a winning trading strategy.”

This argument is often made in the wake of DeFi exploits and boils down to the controversial idea that ‘code is law.’

The defense points to the automatic liquidation system as evidence that users do not need to commit to paying back loans that are taken out on the platform. This argument implies that losses were instead caused by the platforms’ poor risk management, allowing the use of its own (relatively illiquid) governance token as collateral, rather than criminal exploitation of the protocol.

Is code law?

Crypto lawyer and commentator Gabriel Shapiro underlined the importance of the case, suggesting the community is overlooking the potential implications for DeFi as an autonomous financial ecosystem.

Read more: Market manipulator liquidated trying to short Curve

Seemingly finding common ground with Eisenberg’s lawyer’s claims, Shapiro states “there was no bug actually … code worked exactly as intended.”

However, rather than claiming Eisenberg is innocent of market manipulation, Shapiro takes issue specifically with the idea that Eisenberg’s actions “breached a loan agreement implied by the smart contracts.”

That “simply misunderstands DeFi” he goes on, and would “create a precedent where users need to pay back bad debt to credit protocols.” They may be at fault themselves, for example by using poor risk management.

Eisenberg’s shady past

Eisenberg characterized his actions as ‘a highly profitable trading strategy’ at the time. 

Using $10 million of his own funds to pump the price of MNGO tokens on the platform, Eisenberg then borrowed all the assets on the platform against the artificially inflated position.

He later negotiated with the Mango Markets DAO to return a portion of the funds, on the condition that they would not press charges.

Despite claiming his innocence, Eisenberg fled the continental US the day after the attack. He was later arrested in Puerto Rico.

As well as the Mango Markets incident, Eisenberg was accused of foul play related to other DeFi projects, and attempted to profit by targeting Curve Finance founder Michael Egorov’s CRV positions on Aave, before getting liquidated as holders rallied round the token.

Read more: FBI found child porn on Avraham Eisenberg’s phone, court docs say

Following his arrest, Eisenberg’s already unsavory reputation took a further nosedive when FBI investigators stumbled upon alleged child pornography while searching his cellphone.

Full, live coverage of the case can be found via Matthew Rusell Lee, aka Inner City Press.

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post What does Avraham Eisenberg’s ‘code is law’ defense mean for DeFi? appeared first on Protos.

Mango markets manipulator Avraham Eisenberg has been accused of possessing child pornography, according to court documents filed on Friday.

On page 37 of the US government’s memorandum of law in opposition of Eisenberg’s motion to dismiss, officials detailed how the FBI stumbled upon child pornography while extracting data from Eisenberg’s cellphone after obtaining a search warrant on January 19. This allowed the government to request a second search warrant, “expanding the scope…to search for evidence of offense related to the possession and receipt of child pornography,” the document said.

Eisenberg was arrested in Puerto Rico in December and charged with commodities fraud and manipulation. He admitted to the $100 million theft on Mango Markets — which he previously defended as a “legal” and “highly profitable trading strategy.”

His trial is set to begin in December. However, these newly discovered allegations of child pornography made in court documents have possibly added time to Eisenberg’s potential prison sentence.

Read more: Who is Avraham Eisenberg and why is he all over Crypto Twitter?

Under US law, possessing child pornography is often treated with the same gravity as knowingly receiving it with the intent to possess. Possession carries up to 10 years in prison, with no minimum sentence. However, the judge will likely take context into consideration. Details of the child pornography found in Eisenberg’s possession remain unknown; factors like amount found and the severity of the content itself make a difference in sentencing.

Eisenberg has so far not been charged with child pornography. However, according to investigative journalist Karlstack, who played a pivotal role in the case and first reported the child pornography accusations, that will change “any minute now.”

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on Twitter, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.

The post FBI found child porn on Avraham Eisenberg’s phone, court docs say appeared first on Protos.

October has been a record month for crypto criminals, with nearly $720 million lost to anonymous hackers so far, according to Chainalysis.

Generally, blockchain bandits are very careful about hiding their identity, obscuring their movements via bridges, exchanges or privacy tools such as Tornado Cash, which was sanctioned by the US Treasury in August.

But the alleged identity of the man behind one of the month’s larger losses, Tuesday’s >$100 million manipulation of Mango Markets, was revealed by independent investigator Chris Brunet, less than 24 hours after the attack took place.

An article accusing Avraham Eisenberg, a self-described “digital art dealer,” contains screenshots of a Discord conversation in which the account AvrahamEisenberg#5451 discusses the details of the attack, days before it takes place. He’s also shown to have claimed the blockchain address ponzishorter which funded the attack as his own, back in June.

When prompted by another user to disclose the vulnerability, he rejects the idea based on the assumption that the project’s treasury is too small to pay out a generous bug bounty. In fact, following the attack, the hacker used freshly stolen funds to create and vote on a governance proposal that would reward them with a bounty of over half the hacked amount.

Eisenberg’s response to the screenshots, also published in the same article claims he’d been “exploring a number of lending platforms with exposure to low-cap coins,” but doesn’t mention Mango Markets specifically.

Read more: Who is BitBoy Crypto and why does everybody hate him?

This isn’t the first time Eisenberg has been accused of DeFi foul play

An address linked to the ponzishorter account was used in a manipulation of lending protocol Fuse’s liquidation mechanism in April.

And in February, he was accused of embezzling $14 million from Fortress DAO, a project for which he was lead developer. Allegedly, Eisenberg abused the project’s treasury redemption mechanism, meant to redistribute remaining funds to token holders as the DAO closed down operations.

However, he’s not always successful as Kleros founder Clément Lesaege made clear while describing his attempts to exploit the “decentralized arbitration protocol,” via its claims process.

Not content with only blockchain-based disputes, Eisenberg even sued a small town in New York State after falling on ice. He may be an expert market manipulator, but it seems nobody is safe from slippage.

Read more: Richard Heart and the curious launch of Hex, Pulse, and PulseX

Law enforcement is always playing catch-up

On-chain detective work is often a thankless task. The sheer volume of shady practice related to cryptocurrency, NFTs, and DeFi mean that revelations are often rapidly forgotten.

Nothing stops a scammer from setting up a new blockchain address and Twitter profile, and making a fresh start under a different pseudonym. The technical understanding necessary for law enforcement to take claims seriously can also be a blocker to bringing those responsible to justice, though not always.

Popular “on-chain sleuth” ZachXBT announced yesterday that a pair of French phishing scammers had been prosecuted following his exposé published in August.

In Eisenberg’s case, the relatively simple nature of the slip-ups, especially for someone who is clearly a crypto expert, make it seem that he may subscribe to the popular belief amongst hackers that “code is law.”

But in the face of the on-chain evidence and FTX’s claim to be investigating the Mango Markets case, he, too, may soon get the opportunity to test his beliefs in court.

Edit 10:15 UTC, Oct 16: Since this article’s publication, Eisenberg has contacted Protos to address the allegations regarding Mango Markets and the comments by Kleros founder Clément Lesaege.

Regarding Mango Markets, Eisenberg released a detailed statement via Twitter:

Addressing the comments from Lesaege, Eisenberg, claims:

“In February, Fortress DAO voted for a full redemption of the Treasury and I helped implement that. By the end of March, this redemption was complete and any fort token holders were able to exit for a proportional share of the Treasury.

“Clement Lesaege, ran a 51% attack on his own protocol. He had put millions of dollars into the Unslashed insurance pool, and then when claims were made, he used his substantial PNK holdings to deny millions of dollars of legitimate insurance claims to line his own pocket. I documented this fraud extensively at my Deep Fi Value blog in a post titled, The Kleros Experiment Has Failed.”

For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.

The post Who is Avraham Eisenberg and why is he all over Crypto Twitter? appeared first on Protos.