DeFi lending market have grown in popularity significantly over the course of the last few years thanks to the fact that they allow with an Internet connection to post collateral and take out loans in a completely permissionless manner.
This has been extremely useful for a variety of different purposes, not least of which the fact that many are interested in taking out over collateralised loans.
Trader takes down Mango Markets – did he cross a line?
One trader in particular has been boasting of his “unique trading strategies” that allowed him to make huge profits from the Mango Markets protocol.
Avhrama Eisenberg took the view that code was law, and therefore he was only doing exactly as he was permitted by the protocol, but authorities believe that he crossed a line when he made use of an exploit that allowed him to drain $100m from the protocol.
Prosecutors have charged him with commodities fraud and manipulation after the events in October, but he has returned to court to make the plea that he is not guilty.
How our team makes millions in crypto risk-free https://t.co/2jHhJlMHJv
— Avraham Eisenberg (@avi_eisen) January 24, 2022
In addition to the aforementioned quandary that Eisenberg finds himself in, he has been facing further potential prosecutions on behalf of the Securities and Exchange Commission, as well as the Commodity Futures Trading Commission.
The US continues to regulate crypto
After the FTX debacle, there has been heightened pressure on the SEC to regulate crypto and to fulfil their obligations to protect retail investors.
This has been welcomed by many in the space, but some people feel as though they are going too far. For example, in the specific case mentioned above, many believe that Eisenberg shouldn’t be punished for simply taking steps that the protocol allowed.
It is precisely thanks to the possibility of such exploits that larger and more reputable DeFi lending market such as Aave have higher levels of security – in Aave’s case, there is a “security module” comprised of AAVE tokens.
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