A U.S. federal judge has overturned fraud and market manipulation convictions against Avraham Eisenberg, the trader at the center of the $110 million Mango Markets crypto exploit, citing a lack of evidence and the permissionless nature of decentralized finance (DeFi).
In a ruling issued Friday, U.S. District Judge Arun Subramanian found that the government failed to prove Eisenberg had made materially false representations during his high-profile trading maneuver on the DeFi platform. The decision nullifies convictions for commodities fraud and market manipulation and includes a full acquittal on a third charge.
Eisenberg’s defense had argued that his actions—executing a rapid series of trades to inflate the value of Mango's MNGO token by over 1,300%—were possible solely due to how the DeFi protocol was designed. He then used the inflated token value as collateral to withdraw crypto worth $110 million. Prosecutors called the move deceptive, but Eisenberg’s legal team insisted he had operated within the rules of the smart contract system, without lying or hacking.
Judge Subramanian agreed. “Mango Markets was permissionless and automatic,” he wrote, emphasizing that its open design meant anyone could interact with it directly through code — no approval or misrepresentation required. “There was insufficient evidence of falsity,” the ruling added, reinforcing the court’s position that the system couldn’t be legally deceived in the traditional sense.
The judge also dismissed the prosecution's attempt to try the case in New York, noting that Eisenberg was in Puerto Rico at the time of the trades and had no substantial ties to the state related to the incident. The presence of a Mango user in Poughkeepsie and a third-party service in Manhattan, the court found, didn’t justify venue in New York.
The Department of Justice now faces a decision on whether to refile the dropped charges. The broader political climate may play a role, as the Trump administration has recently indicated a less aggressive stance toward crypto enforcement.
Despite this legal win, Eisenberg remains in custody. Earlier this month, he was sentenced to nearly four years in prison on an unrelated conviction after pleading guilty to possessing child pornography. That charge emerged during the FBI’s investigation into the Mango Markets case and was prosecuted separately.
Eisenberg, who once referred to himself as an “applied game theorist,” has also been hit with civil suits from the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), keeping him entangled in legal battles over his actions in the DeFi space.
