Key Takeaways:
A federal judge has overturned the fraud and manipulation convictions of Avraham Eisenberg in connection with the $110 million Mango Markets case. The court accepted Eisenberg’s argument that he operated within the legal bounds of flawed smart contract mechanisms rather than committing fraud. However, Eisenberg remains incarcerated due to separate charges of child pornography.
On Friday, Judge Arun Subramanian rescinded Eisenberg’s convictions for commodities fraud and market manipulation, citing that prosecutors did not adequately demonstrate that he made materially false representations during the trading events at Mango Markets.
The ruling also acquitted Eisenberg on a third count, significantly diminishing the government’s case against him.
Eisenberg’s Trading Strategy Under Scrutiny
Eisenberg had been convicted in April 2024 after a jury determined he artificially inflated the price of Mango’s MNGO token by over 1,300% in a short time frame. This manipulation allowed him to use the inflated asset as collateral, resulting in a withdrawal of $110 million in cryptocurrency from the platform.
While the Department of Justice portrayed Eisenberg’s actions as a premeditated deception aimed at exploiting the smart contract system, his defense contended that he merely capitalized on inherent flaws in the open-source code without engaging in any deceitful conduct.
Judge Subramanian endorsed this perspective, stating that the platform operated under a “permissionless and automatic” framework, which complicated the legal argument for fraud. He noted that “there was insufficient evidence of falsity” in the prosecution’s claims.
Everything we’ve been told about “Code is Law” defense not standing a chance in court has been a lie. Mango Markets / Avi Eisenberg charges just been dropped by a federal charge.
The same logic used to dismiss the case can be used for pretty much any permissionless DeFi… pic.twitter.com/yWIUnmAUxX
— Trust (@trust__90) May 24, 2025
The ruling further declared that New York was not the appropriate venue for the trial. Eisenberg, who was operating from Puerto Rico at the time of the trades, had his case disentangled from connections to New York through a Mango user in Poughkeepsie and a third-party service provider in Manhattan.
As the Justice Department assesses whether to refile the case, early indications suggest a possible easing in crypto-related regulatory enforcement under the current administration.
Eisenberg’s Separate Legal Troubles
Despite achieving a significant legal victory, Eisenberg remains behind bars, having been sentenced to nearly four years in federal prison earlier this month for child pornography possession. This charge arose from evidence collected during his arrest in Puerto Rico in 2022.
In addition to his criminal case, Eisenberg faces ongoing civil litigation from both the SEC and CFTC related to his actions. On October 11, 2022, Mango Markets suffered a significant breach, leading to the loss of approximately $110 million from its treasury. Following the incident, Eisenberg publicly identified himself as the perpetrator, claiming that his approach constituted a legal “highly profitable trading strategy” aligned with the protocol’s design.
Prosecutors allege that Eisenberg engaged in manipulative trading by utilizing two accounts to trade futures contracts that were linked to the values of Mango’s MNGO token and the stablecoin USD Coin.
Last month, U.S. federal prosecutors requested a prison sentence for Eisenberg of up to 6.5 years, emphasizing the gravity of his actions and their impact on investors as well as the operational status of Mango Markets.
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