Judge Overturns Eisenbergs Convictions in Mango Markets Case

A U.S. judge has overturned the fraud and market manipulation convictions of Avraham Eisenberg, the crypto trader accused of draining $110 million from the now-defunct decentralized finance protocol Mango Markets. On Friday, U.S. District Judge Arun Subramanian ruled that prosecutors failed to prove Eisenberg made false representations to the platform. He also moved to acquit Eisenberg of wire fraud charges. The investor manipulated the price of Mango’s native token MNGO with massive trades by more than 1,000% in 20 minutes before getting the protocol to allow him to borrow and withdraw $110 million in various cryptocurrencies, backed by the inflated collateral.

Eisenberg’s defense argued that the platform, which operated through smart contracts, allowed anyone to transact freely and that he simply exploited a vulnerability. The judge agreed, stating that Mango’s permissionless structure meant that there “was insufficient evidence of falsity” from prosecutors regarding Eisenberg’s representation to Mango Markets. Eisenberg was arrested in December 2022, and while this case collapsed, he is still currently serving a four-year sentence handed out after he pleaded guilty to the possession of child sexual abuse material. “From the beginning, we said this case was fatally flawed,” his attorney Brian Klein of Waymaker LLP said. “We are very pleased for Avi that the judge granted our motion and dismissed the case.”

A US federal judge has vacated key fraud and manipulation convictions against Avraham Eisenberg, the trader at the center of the case involving a $110 million exploit of the decentralized exchange Mango Markets. On Friday, US District Judge Arun Subramanian ruled that the evidence presented at trial failed to support the jury’s conclusion that Eisenberg made materially false representations to Mango Markets. The decision vacates Eisenberg’s convictions for commodities fraud and market manipulation and acquits him of a third charge, significantly weakening the government’s case.

Eisenberg, a self-proclaimed “applied game theorist,” was convicted in 2024 for artificially inflating the price of Mango’s MNGO token by over 1,300% in a matter of minutes and using the resulting gains as collateral to withdraw $110 million in crypto assets from the platform. The Justice Department argued that he deceived Mango’s smart contract-based lending system, but Eisenberg’s defense maintained that he merely exploited poorly designed, permissionless code — without making any false representations. Judge Subramanian agreed, writing that “Mango Markets was permissionless and automatic,” meaning the system couldn’t be deceived in a legal sense. “There was insufficient evidence of falsity,” the judge added, siding with Eisenberg’s interpretation of DeFi mechanics.

The judge also rejected prosecutors’ argument that the case should be heard in New York. Eisenberg was in Puerto Rico at the time of the trades, and the court found that no meaningful activity tied to the alleged crime occurred in New York. The US government must now decide whether to refile the vacated charges, though the Trump administration has recently signaled a reduced focus on crypto enforcement. Eisenberg still faces civil suits from both the SEC and CFTC. While this ruling clears Eisenberg in the Mango Markets case, he remains behind bars.

In a separate case, Eisenberg was sentenced to nearly four years in prison on May 1 after pleading guilty to possessing child pornography — a charge stemming from unrelated evidence uncovered during his arrest. In December 2022, US federal law enforcement authorities arrested Eisenberg in Puerto Rico. FBI officials charged the hacker with one count of commodities fraud and one count of commodities manipulation. A jury found Eisenberg guilty of wire fraud, commodities fraud, and commodities manipulation in April 2024. The defense argued that the exploit was not a cybercrime and represented a “successful and legal trading strategy.”

This ruling highlights the complexities of regulating decentralized finance (DeFi) platforms, where the permissionless nature of smart contracts can make it difficult to prove intentional deception. The decision underscores the need for clearer legal frameworks to address the unique challenges posed by DeFi, as well as the importance of venue considerations in cases involving international actors. The outcome of this case may influence future legal strategies in similar DeFi-related exploits, as regulators and law enforcement grapple with the evolving landscape of digital assets and decentralized technologies.