Mango Markets Fraud Convictions Overturned by Judge

Hi! In today’s edition:

• 🔥 Mango Markets exploiter walks… almost

• 😵‍💫 Hyperliquid whale makes worst bets ever

• 🧠 How Cetus helped its hacker

Judge Overturns Fraud Convictions of Mango Markets Exploiter

A U.S. federal judge has overturned three criminal convictions of Avraham Eisenberg, the trader accused of stealing $110 million from decentralized exchange Mango Markets.

U.S. District Judge Arun Subramanian vacated Eisenberg's convictions for commodities fraud and market manipulation, and acquitted him of a third charge.

Judge Subramanian found that the evidence did not support the jury's conclusion that Eisenberg had made materially false representations to Mango Markets.

“Mango Markets was permissionless and automatic,” the judge wrote. “The court agrees that there was insufficient evidence of falsity.” 

The court ruled that New York was not the proper venue for the case. Eisenberg executed the trades from Puerto Rico, and the government's attempts to tie the case to New York, citing a user in the upstate town of Poughkeepsie and a third-party vendor in Manhattan, were deemed insufficient to establish jurisdiction.

Despite the ruling, Eisenberg remains in prison, serving a separate four-year sentence for possession of child sexual abuse material, a penalty unrelated to the Mango Markets case.

Hyperliquid Trader Closes $1B Leveraged Bitcoin Short at $13.4M Loss

James Wynn, a prominent trader on decentralized exchange Hyperliquid, became the talk of the crypto trading community after dramatically reversing his stance on Bitcoin.

Wynn closed a $1.2 billion long position and opened a $1 billion short position within a day, only to close that position at a $13.4 million loss.

His new short was a highly leveraged 40x position with a liquidation price set at $110,450. He opened the trade betting on a lower bitcoin price after also losing on his long position, taking his total 24-hour losses to $23.7 million.

As of 4:45 am ET on Monday, bitcoin was trading at around $109,800, up more than 2% in the previous 24 hours. 

Bitcoin open interest has surged to record highs in the past week, and currently stands above $75 billion across exchanges, according to data from CoinGlass. 

‘Math Bug’ The Real Reason Behind $200M Cetus Hack: Dedaub

Blockchain security firm Dedaub found that a flawed overflow check was the reason behind the massive $200 million-plus exploit on Sui decentralized exchange Cetus last week.

Dedaub discovered that when you add liquidity to Cetus, the system does some math to check how much you should get in return. There was a mistake in the code that checks for “overflow,” or when a number gets too big for the computer to handle.

The check was supposed to stop that from happening, but it didn’t work correctly. As a result, the attacker needed to deposit only one token to obtain a huge amount of liquidity.

Dedaub also clarified that the issue was “NOT an oracle issue (despite what the team initially claimed),” and that it was “NOT about minting fake tokens (some security firms got this wrong).”

“The affected funds consist of 2 parts, one being within Sui and the other bridged out of the ecosystem mainly held in ETH,” Cetus said in a community update. “The assets within Sui addresses are currently frozen through the efforts of the validators.”

The team is pursuing two possible outcomes — an onchain vote to authorise recovery of the frozen funds or reaching a whitehat agreement with the hacker.

• 🧨 World Liberty Financial on Friday denied claims that Binance founder Changpeng “CZ” Zhao had acted as a foreign liaison for its Trump-linked DeFi project, while Zhao alleged that a venture capital-backed rival had launched a smear campaign trying to block Binance’s influence on U.S. crypto policy.

• 🐸 A Solana memecoin launched during Trump’s exclusive crypto dinner peaked at a $450,000 market capitalization before crashing 89%, as onchain data revealed suspicious token distribution and the deployer mistakenly sent funds to himself.

• 🏃‍♂️ Polygon co-founder Mihailo Bjelic on Friday stepped down from both the Polygon Foundation’s board and Polygon Labs, becoming the third co-founder to quit since 2023 and signaling further leadership shifts as the network evolves its Layer 2 roadmap.

• 🔒 Crypto investor John Woeltz was arraigned in a New York court on Friday after allegedly kidnapping and torturing an Italian man in a Manhattan townhouse for weeks, trying to obtain his crypto passwords, with police recovering weapons, drugs, and incriminating photos after the victim escaped.

• 🚀 Axiom, a trading platform built by two 22-year-old Y Combinator-backed founders, pulled in $100 million of revenue just four months after launching early access, by combining Solana token swaps, Hyperliquid perpetuals, idle yield features, and a gamified fee-reward system without launching its own token.

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