New York – A federal judge has overturned significant fraud and manipulation convictions against Avraham Eisenberg, a trader involved in a $110 million exploit of the Mango Markets decentralized exchange. U.S. District Judge Arun Subramanian issued the ruling on Friday, stating that the evidence presented in the original trial did not substantiate the jury’s conclusions that Eisenberg provided materially false representations.
The judge’s decision vacates Eisenberg’s convictions for commodities fraud and market manipulation and acquits him of a third charge, effectively weakening the government’s position in the case. In 2024, Eisenberg was found guilty of artificially raising the price of Mango’s MNGO token by over 1,300% in a short time span, subsequently utilizing the inflated value as collateral to withdraw significant crypto assets from the platform.
The Justice Department maintained that Eisenberg misled Mango’s smart contract-based lending mechanism. However, his defense argued that he exploited a poorly designed system without any deceitful representation. Judge Subramanian concurred with the defense, asserting that the nature of the permissionless system meant it could not be easily deceived. He remarked on the lack of evidence proving any form of deceit in the transaction.
Additionally, the judge dismissed the government’s claim that the case should be tried in New York, noting that Eisenberg was in Puerto Rico at the time of the trades. He found that the connections cited by the government, including a user based in Poughkeepsie and a third-party vendor in Manhattan, were insufficient to establish appropriate jurisdiction.
Following the ruling, the Department of Justice faces a decision on whether to refile the vacated charges. This follows a trend, as the current administration has indicated a reduced focus on enforcing cryptocurrency regulations. Meanwhile, Eisenberg continues to face civil lawsuits from both the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Although this ruling has cleared Eisenberg in the Mango Markets case, he remains incarcerated due to an unrelated conviction. On May 1, he was sentenced to nearly four years in prison after pleading guilty to charges of possessing child pornography. The evidence for this charge emerged during his arrest by federal law enforcement authorities in Puerto Rico in December 2022, which initially prompted the investigation into commodities fraud.
In April 2024, Eisenberg was convicted of wire fraud, commodities fraud, and commodities manipulation. His legal team contended that the exploit was not a cybercrime but rather represented a successful trading strategy.
This complex case continues to unfold, intertwining issues of digital asset trading and criminal law, raising questions about the regulatory framework within the rapidly evolving cryptocurrency landscape.
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