Crypto Trader Seeks to Keep Millions in Alleged DAO Fund Drain Case
Avraham Eisenberg, a crypto trader, is currently embroiled in a legal battle with Mango Markets, a decentralized autonomous organization (DAO), over funds he allegedly drained from the DAO in October 2022. The case centres on whether he should be required to return all the funds or just a portion of them.
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The Case
In a court filing dated Feb. 15, Eisenberg claimed that he only needs to return $67 million of the $114 million worth of tokens he acquired through a complex trading system. Mango Markets is seeking the remaining funds and has filed an application for a temporary restraining order and preliminary injunction. The DAO claims that Eisenberg fraudulently misrepresented himself and unjustly enriched himself in the process.
The Dispute
Eisenberg, however, is arguing that the matter was already resolved following a settlement agreement between the two parties, which is why he is seeking to dismiss the restraining order. He is also demanding that Mango Markets post a bond that is equal to the current value of the currency that has been restrained.
The crux of the disagreement lies in the legitimacy of a governance vote that Mango Markets passed to retrieve a portion of the exploit funds. Mango Labs, which is representing the DAO, claims that the contract that allowed Eisenberg to keep most of his haul in exchange for a promise not to sue is void because it was agreed upon under duress.
Legal Action
In addition to this legal battle, Eisenberg is also facing legal action from the U.S. Commodity Futures Trading Commission (CFTC) on market manipulation grounds.
The Implications
This case may force the judge to evaluate the specifics of crypto governance in a rare clash between smart contract law and actual law. The duelling positions may have significant implications for future DAOs and how they manage disputes.
Conclusion
The legal battle between Avraham Eisenberg and Mango Markets over the alleged drain of funds from the DAO has many implications for the future of crypto governance. As the case unfolds, it will be interesting to see how the judge resolves the disagreement and what precedents it may set for future DAOs.
