DeFi wins after Mango Markets exploiter faces regulatory action, according to Moody’s
According to credit rating agency Moody’s, the SEC and CFTC taking action against the suspected fraudster demonstrates how decentralized finance is evolving into a “safer and more accepting environment.”
According to credit rating agency Moody’s, recent charges made against Mango Markets extortionist Avraham Eisenberg will benefit the decentralized finance (DeFi) industry.
Assistant vice president of decentralized finance Cristiano Ventricelli wrote in a Jan. 31 letter from Moody’s Investor Service that enforcement steps taken by the two top U.S. market regulators in January suggest that DeFi is moving toward a “safer and more hospitable environment.”
“The fact that both the SEC and CFTC took action against market manipulation by an alleged rogue trader is a credit positive for the industry as a whole.”
Ventricelli claimed that these measures could “enhance governance of the DeFi industry,” which has often been a challenging sector to regulate because of the ambiguity around who has authority over open-source protocols.
The alleged market manipulator was charged on January 20 by the Securities and Exchange Commission (SEC), while Eisenberg was charged on January 9 by the Commodity Futures Trading Commission (CFTC).
Similar remarks were expressed by Ventricelli in a Moody’s piece that was tweeted on January 26, but in the email from January 31, he provided more details.
The report claimed that DeFi is “no longer a no man’s land,” alluding to a speech given to the European Parliament in June by Christine Lagarde, president of the European Central Bank, in which she argued that a framework for decentralized finance should be added to Europe’s crypto legislation, Markets in Crypto-Assets (MiCA).
Ventricelli hypothesized that both institutional investors, “like banks,” and retail investors may use the technology more widely as a result of this safer environment.
Eisenberg was accused of engaging in a manipulative and dishonest scheme to fraudulently raise the price of swaps sold by Mango Markets, according to the CFTC petition.
When the share price reverted to its pre-manipulation level, the SEC petition claimed that Eisenberg’s activities had “placed the platform at a deficit.”
On January 25, Eisenberg was sued by Mango Markets’ parent firm Mango Labs, which is seeking $47 million in compensation for Eisenberg’s alleged October exploit in addition to interest.