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December 29, 2022

🥛Can a profitable trading strategy land you in prison? 👀

GM. This is the Milk Road, the daily newsletter that makes crypto feel like Olive Garden. When you’re here, you’re family.

Here’s what we got for you today:

  • Profitable trading strategy turns into prison

  • Alameda wallets go active

  • Shiba Inu dog has cancer

  • Milky Memes

PROFITABLE TRADING STRATEGY TURNS INTO PRISON

Ladies & gents, do I have a story for you.

It involves $100m+ of crypto, an FBI arrest, and a Twitter confession.

Get ya popcorn ready. This one’s a doozy.

Part 1: The Crime

Back in October Hacktober, Mango Markets (a decentralized crypto exchange on Solana) was exploited for $100m+.

But here’s the thing: it wasn’t a hack. No coders in a van. No fiery explosions. None of the cool sh*t we see in the movies.

Instead, it was a simple design failure. You see, Mango Markets let users borrow & withdraw crypto based on the value of their assets held on the platform (important for later).

They also let users trade perpetual futures (a fancy way to go long or short an asset) on their native token, MNGO.

Here’s how it went down:

  • A trader set up a long position on Mango using MNGO perpetuals (a bet that the MNGO price would go up)

  • Separately, they bought a ton of MNGO tokens to force the price to go up. MNGO jumped ~1,300% in the span of 20 minutes

  • As the price of MNGO shot up, so did the value of the trader’s perpetual position on Mango (double profit)

  • And since Mango let you borrow against the value of your positions, they were able to borrow & withdraw $100m+ worth of crypto (aka all the money on the platform)

Just like that, Mango Markets went insolvent and users on the platform lost all their funds.

Part 2: The Confession

So who was behind the crime? Avraham Eisenberg – a guy who runs “highly profitable trading strategies with close to no risk”. 🧐

According to Avraham, everything he did was completely legal & by the books. He blamed it on Mango Markets being poorly designed and leaving the bank vault wide open.

But just in case, he offered a deal to the MangoDAO. He’d return some of the funds if Mango users didn’t try to put him in jail.

The deal was put to a vote by MNGO holders, and the proposal passed with flying colors.

Avraham returned $67m to help repay Mango customers, but kept $40m as a “bug bounty”. Not bad for a day’s work…

Part 3: The Arrest

When Avraham tweeted about the Mango exploit, he got everyone’s attention… including the FBI.

And while Avraham viewed his thread as a Grade A banger, the FBI saw something else… a written confession. And they didn't even have to do the good cop/bad cop thing.

He was arrested in Puerto Rico earlier this week and is now being charged with commodities fraud & commodities manipulation.

Avraham is the first U.S resident to face charges for manipulating a DeFi platform. And unfortunately for him, he didn’t call Saul.

Instead, he’s being represented by a public defender. Gulp.

ALAMEDA WALLETS GO ACTIVE

Yesterday, Alameda wallets woke up like the ghost of Christmas past:

  • An Alameda wallet dumped coins linked to Samuel/FTX (Solana, Lido, Aptos)

  • The coins were swapped for ETH and Tether

  • That ETH and Tether was then cleaned via mixers like FixedFloat & ChangeNow

Mixers blend your coins with other users’ coins, which makes it harder to trace the original wallet addresses.

In other words, they’re what hackers use to hide their tracks.

The coins were then swapped again for BTC, and are now sitting in four separate wallets. All eyes are on what happens next… 👀

No one knows who was behind it, but the Milk Man has his theories…

TODAY'S EDITION IS BROUGHT TO YOU BY ROOFSTOCK 

Most people buy crypto to invest. They want to see their money go from $1,000 to $5,000.

They want to go from crashing at their parent’s place to buying the house at the end of the cul-de-sac.

The truth is crypto wasn’t made to get people rich. Crypto was made as an alternative to our current financial system. However, it still isn't used in one of the largest parts of the financial system… real estate.

Right now buying a home has more hoops to jump through than the Westminster Dog Show.

But a company that has done $5b in transactions since 2015 is changing how we buy homes.

The company is called Roofstock On-Chain and they are making it easy to buy Real Estate on the blockchain.

Roofstock says on-chain real estate makes sense if you:

  • Have money in crypto and are looking for a safe place to invest it

  • Want to get an on-chain mortgage using your tokenized home as collateral

  • Want everything in one central place without 100 message-long email chains of documents

Click here to learn how to buy or sell your next home with Roofstock

THE DOGECOIN MASCOT HAS CANCER

You’re gonna wanna sit down for this one…

This is Kabosu.

Kabosu is:

  • The mascot for Dogecoin

  • Star of an NFT that sold for $4m

  • 17-years-old (2 years older than her breed’s life expectancy #builtdifferent)

Sadly, we just found out this sweet girl is fighting leukemia and liver disease 🙁

Just when we thought this year couldn’t get any worse…

Our thoughts & prayers are with Kabosu.

MILKY MEMES

Trust us, it's worth the watch 😂

Well, that aged like some fine milk…

That's a wrap for today. Stay thirsty & see ya tomorrow! If you want more, be sure to follow our Twitter (@MilkRoadDaily)

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.