Mango Exploiter's Funds Get Liquidated After Roiling Aave Using $20M of Borrowed Curve Tokens

A trader identified as Avraham Eisenberg, who became infamous for his “very profitable trading strategy” of exploiting $114 million from Mango Markets, borrowed tens of millions of Curve DAO tokens and sent them to an exchange – but his position appears to have gotten liquidated.

AccessTimeIconNov 22, 2022 at 9:13 p.m. UTC
Updated Nov 22, 2022 at 9:52 p.m. UTC

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.

A well-known crypto trader linked to last month’s $114 million Mango Markets exploit is at it again – but this time appears to have gotten hung up.

The trader, identified on Twitter and tagged by blockchain analysts as Avraham Eisenberg, borrowed 40 million curve (CRV) tokens (worth $20 million at the time) using the decentralized lending platform Aave, then transferred them to the OKEx crypto exchange.

But after a series of wild swings in the CRV price, Eisenberg's position appears to have gotten liquidated.

According to the blockchain analysis firm Arkham, Eisenberg borrowed the majority of CRV tokens on Aave by pledging $40 million in USDC stablecoin as collateral.

According to blockchain data, he then sent the 40 million CRV to crypto exchange OKEx in two transactions – possibly putting the tokens in position for a quick sale.

Blockchain sleuths on Twitter speculated that he appeared to be building up a CRV short position – that is, to profit off a price decline.

CRV’s price declined early Tuesday, then shot up 75% within a few hours, according to CoinDesk pricing data, in what appeared to be a short squeeze.

Foiled?

In the end, all of Eisenberg’s CRV loan was liquidated, leaving Aave with $1.6 million of bad debt, according to blockchain data by Blockanalitica. The amount is insignificant relative to the $6 billion total value locked on the protocol.

“He ultimately didn't have enough initial capital to make the 'profitable trade' work,” Dustin Teander, analyst of blockchain intelligence firm Messari, told CoinDesk.

Eisenberg had not returned a request for comment as of press time.

The dramatic sequence of events comes just five weeks after Eisenberg outlined a plan to exploit a loophole in Aave’s collateral accounting system.

This could have created a vicious cycle for the lending protocol, which could be “very dangerous for Aave,” Arkham tweeted earlier today.

'Highly profitable trading strategy'

Eisenberg describes himself on his Twitter profile as an “applied game theorist” and includes a quote attributed to Scott Alexander that reads, "not … a very serious person.”

He became infamous in crypto circles for draining $114 million from Mango Markets, a Solana-based decentralized finance (DeFi) protocol, by exploiting a loophole in October.

He later returned $67 million to Mango and defended his attempt as being “legal” and not an exploit but a “highly profitable trading strategy,” which has since become a meme on Crypto Twitter.

UPDATE (Nov. 22, 21:26 UTC): Adds context about Eisenberg's maneuver on Mango Markets in October.

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Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.

CoinDesk - Unknown

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.