Prosecutors claim Eisenberg manipulated Mango Markets futures contracts on Oct. 11, when he drove up the price of swaps by 1,300%. He used them to borrow about $110 million of cryptocurrency from other Mango depositors, the US alleges.Below the fold, my analogy
Four days later he posted on Twitter: “I was involved with a team that operated a highly profitable trading strategy last week.” He also said he believed “all of our actions were legal open market actions, using the protocol as designed.”
Consider the specification of the front door of a house:
- It has three states, open, closed and locked.
- In the closed or locked states no-one can pass through.
- In the open state anyone can pass through.
- Someone with a key can change the state from closed to locked.
- Someone with a key can change the state from locked to closed.
- Anyone can change the state from closed to open.
- Anyone can change the state from open to closed.
- You are passing a house with a front door. You do not have a key. It is open. You enter the house, look around, and leave the house.
- You are passing a house with a front door. You do not have a key. It is open. You enter the house, look around and see a gold bar. You pick up the gold bar and leave the house.
In case 2 you have committed theft, and are very likely to be prosecuted. The definition of theft is:
A theft occurs any time there in an unauthorized taking of property from another with the intent to permanently deprive that person of the property.Note that in both cases the front door performed exactly as specified. It was open and it permitted you to pass through. The difference has nothing to do with the front door performing as specified; it is what you did with the correctly performing front door.
Eisenberg claims that he found an open door, passed through, took valuable property that did not belong to him, and left. Arguing that because the door functioned as specified it was legal for him to take the property isn't going to be an effective defense.