A U.S. federal judge has overturned key fraud and market manipulation convictions against trader Avraham Eisenberg, a central figure in the $110 million exploit case involving the decentralized exchange Mango Markets.
Last Friday, U.S. District Judge Arun Subramanian ruled that the evidence presented at trial was insufficient to support the jury's conclusion that Eisenberg made significant false statements regarding Mango Markets.
This decision vacated Eisenberg's convictions for commodity fraud and market manipulation, declaring him not guilty on a third charge, significantly weakening the government's case.
Eisenberg, who describes himself as an "applied game theorist," was convicted in 2024 for artificially inflating the price of Mango's MNGO token by over 1300% within minutes and using the resulting profits as collateral to withdraw $110 million in crypto assets from the platform.
The Department of Justice argued that Eisenberg deceived Mango's smart contract-based lending system, but Eisenberg's defense team insisted that he merely exploited poorly designed, permissionless code—without making any false statements.
Judge Subramanian agreed, stating, "Mango Markets is permissionless and automated," meaning the system could not be deceived in a legal sense. The judge added, "The evidence of false statements is insufficient," thereby supporting Eisenberg's interpretation of the DeFi mechanism.
The judge also dismissed the prosecutors' argument that the case should be tried in New York. Eisenberg was in Puerto Rico at the time of the trades, and the court found that no significant activities related to the alleged crime occurred in New York.
The Department of Justice mentioned a Mango user located in Poughkeepsie and a third-party vendor in Manhattan, but the judge ruled that these were insufficient to establish an appropriate venue for trial.
The U.S. government must now decide whether to refile the dismissed charges, although the Trump administration recently indicated it would reduce its focus on cryptocurrency enforcement. Eisenberg still faces civil lawsuits from the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
While this ruling has cleared Eisenberg of charges in the Mango Markets case, he remains incarcerated.
In another unrelated case, Eisenberg was sentenced to nearly four years in prison on May 1 after admitting to possessing child pornography—an allegation stemming from unrelated evidence discovered during his arrest.
In December 2022, U.S. federal law enforcement authorities arrested Eisenberg in Puerto Rico. FBI officials charged the hacker with one count of commodity fraud and one count of commodity manipulation.
In April 2024, a jury found Eisenberg guilty of wire fraud, commodity fraud, and commodity manipulation. The defense argued that the exploit was not cybercrime but rather "a successful and legitimate trading strategy."
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Original article: “Judge Overturns Fraud Convictions in Mango Markets Exploit Case”
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