Judge Vacates Avraham Eisenberg's Convictions in Mango Markets 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 legal development underscores the complexities involved in applying traditional legal frameworks to the rapidly evolving world of cryptocurrency and DeFi. The judge's decision highlights the challenges in proving fraud and manipulation in decentralized, permissionless systems where the code itself is the governing mechanism. The ruling also raises questions about the jurisdiction and venue for such cases, as the court found insufficient ties to New York to justify hearing the case there. The outcome of this case has significant implications for the regulation and legal interpretation of DeFi platforms, which operate on a permissionless and decentralized model. The US Justice Department now faces the decision of whether to prosecute Eisenberg on the two vacated charges, adding another layer of uncertainty to the evolving landscape of cryptocurrency regulation.