Avraham Eisenberg, the cryptocurrency trader responsible for the $100 million Mango Markets price manipulation scheme last month, could not manipulate Aave in the same way.
Is Infamous Cryptocurrency Trader Boasted Last Month?
An infamous cryptocurrency trader who boasted last month about making off with more than $100 million in a contentious price manipulation scheme appears to have lost millions on a similar exploit attempt that failed early Tuesday.
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According to on-chain data, Avraham Eisenberg, the trader responsible for the Mango Market hack in October, recently borrowed 40 million curves (CRV) tokens through the decentralised lending site Aave. The dramatic action appears to be part of a plan to sell off the tokens, drive down the value of CRV as a result, and profit handsomely from millions of short bets on the token, leaving Aave with a mountain of bad debt.
But the ruse did not work out as expected. Early on Tuesday, the price of CRV fell from $0.53 to $0.41, but it immediately rose back up, reaching a high of $0.71. According to information from CoinGecko, as of this writing, CRV has increased 31% over the past day to $0.67
What’s Strategy Eisenberg Publicly Described?
Eisenberg publicly described a strategy to influence Aave’s lending regulations weeks ago, which would have potentially made it possible for the trader’s Tuesday plot to be successful.
I've been advised aave is perfectly safe so here's the potential trading strategy. Not financial or legal advice, but if you do make 9 figures on this feel free to send a tip
Note that starting with more initial capital increases success odds and profit percentage pic.twitter.com/HKAF7Y5ogM
— Avraham Eisenberg (@avi_eisen) October 19, 2022
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However, neither Aave nor Gauntlet—the financial modelling software used by Aave—moved to take any preventative measures in the weeks that followed it to stop an exploit as the one Eisenberg described.
Tuesday afternoon, after Eisenberg’s immediate plan, had failed, Gauntlet released a statement to make it clear that Aave had survived the incident largely unscathed.
Gauntlet tweeted, “The attempt to squeeze CRV on Aave has been unsuccessful and unprofitable. Aave has accumulated a much smaller insolvent position despite this.
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The attempt to squeeze CRV on @AaveAave has been unsuccessful and unprofitable. Despite this Aave has accrued a much smaller insolvent position
Our immediate recommendation is to freeze a number of tail assets on v2 to mitigate the risks of similar, likely unprofitable, squeezes
— Gauntlet (@gauntletnetwork) November 22, 2022
According to blockchain data examined by Blockanalitica, this less severe insolvency results in bad debt on Aave’s end of $1.6 million; nevertheless, the sum might have been much higher had Eisenberg’s exploit been successful.
In response to a tweet that has since been removed, Gauntlet declared that it would contribute to paying the $1.6 million loss as part of their insolvency refund programme, which guarantees to pay up losses sustained by customers like Aave as a result of Gauntlet’s “risk parameter optimisation” defects.
An Aave governance proposal was created a few hours after Eisenberg’s CRV manoeuvre failed to prevent future manipulation of other cryptocurrencies on the platform.
The plan received a mixed response from some Aave DAO members.
It’s better late than never, right? A participant wrote. Gauntlet needed to have made this suggestion long before Avi fired the gun. While Avi was boasting about his attempt to abuse AAVE financially, what were you doing?
Is Eisenberg Stole Million Dollars In Mango Markets?
When Eisenberg stole more than $100 million from Mango Markets, a company based in Solana, last month using an oracle price manipulation, Mango DAO agreed to drop any plans to file criminal charges against the trader in exchange for his return of $67 million of the money that had been taken to help the company pay off its bad debt.
Eisenberg agreed to the arrangement. The next day, he revealed himself as the trader responsible for the move and described the incident—which was generally seen as a hack—as a “very profitable trading approach.”
His response to Decrypt’s request for comment regarding the events of Tuesday was delayed.