Judge overturns fraud convictions in Mango Markets exploit case

Avraham Eisenberg, the trader accused of exploiting Mango Markets for $110 million, has seen his key fraud and manipulation convictions overturned. US District Judge Arun Subramanian vacated the convictions, finding insufficient evidence to support the jury’s verdict. The judge’s ruling centers on the argument that Eisenberg did not make materially false representations to Mango Markets.

The case revolved around Eisenberg’s alleged manipulation of Mango’s MNGO token price, which he inflated by over 1,300% to secure a massive cryptocurrency withdrawal. Prosecutors argued this constituted deception of Mango’s smart contract system. Eisenberg’s defense countered that he merely exploited vulnerabilities in the permissionless code, a strategy they characterized as legal.

Judge Subramanian sided with the defense, emphasizing the permissionless and automatic nature of Mango Markets’ system. He concluded that the system, in its design, could not be “deceived” in a legal sense, thus rendering the evidence of falsity insufficient. This decision significantly weakens the government’s case against Eisenberg.

The judge also dismissed the prosecution’s venue argument, rejecting claims that the case should be heard in New York. Despite the presence of a Mango user in Poughkeepsie and a third-party vendor in Manhattan, the court determined that insufficient meaningful activity related to the alleged crime occurred in New York. Eisenberg’s location in Puerto Rico during the trades was deemed more significant.

The Department of Justice now faces the decision of whether to refile the vacated charges. This comes amidst the Trump administration’s indicated reduction in crypto enforcement efforts. However, Eisenberg remains subject to ongoing civil suits from the SEC and CFTC.

This legal victory does not fully resolve Eisenberg’s legal troubles. He remains incarcerated, serving a separate, unrelated sentence of nearly four years for possession of child pornography, a charge stemming from evidence uncovered during his arrest in Puerto Rico in December 2022. His initial arrest led to charges of commodities fraud and manipulation, with a jury finding him guilty in April 2024. Despite this ruling, the legal battle surrounding the Mango Markets exploit continues to unfold.