A US federal judge has vacated key fraud and market manipulation convictions against Avraham Eisenberg, the central figure in the widely publicized Mango Markets exploit case, significantly weakening the government’s prosecution.
Judge Arun Subramanian, presiding in the Southern District of New York, ruled that the evidence presented at trial failed to support the jury’s finding that Eisenberg had made materially false representations to Mango Markets.
Although prosecutors had successfully secured convictions in 2024 for wire fraud, commodities fraud, and commodities manipulation, the court has now vacated two of those convictions and fully acquitted him on the third charge.
The 2022 Mango Markets exploit
The case stems from a controversial 2022 incident in which Eisenberg reportedly manipulated the price of Mango’s native MNGO token, inflating its value by more than 1,300% in a matter of minutes.
By driving up the token’s price, he was able to use the artificial gains as collateral to withdraw $110 million in digital assets from the Mango Markets platform, a decentralized exchange governed by smart contracts.
Throughout the trial, the Department of Justice argued that Eisenberg had knowingly deceived the platform’s automated systems, painting the exploit as a calculated act of financial fraud.
However, Eisenberg’s defense team insisted that he merely took advantage of flaws in the protocol’s design, executing a strategy made possible by its permissionless and trustless nature.
Judge Subramanian agreed with this interpretation, stating in his opinion that the Mango Markets protocol operated automatically and could not legally be “deceived” in the way traditional systems might.
Because Mango’s code executed transactions without oversight or subjective judgment, the court found insufficient grounds to conclude that any falsity had occurred in Eisenberg’s actions.
The ruling aligns with a growing legal perspective that smart contracts, while susceptible to manipulation, do not necessarily fit within the bounds of conventional fraud statutes.
The judge also dismissed the government’s argument regarding venue, finding no substantial connection between the trades and the Southern District of New York.
Although a Mango Markets user resided in Poughkeepsie and a third-party vendor was based in Manhattan, the court concluded that these details did not establish a meaningful jurisdictional link.
Eisenberg executed the trades from Puerto Rico, and the court emphasized that this fact further weakened the government’s venue claim.
Avraham Eisenberg still faces civil proceedings from the SEC and CFTC
While the fraud and manipulation charges have been vacated, Eisenberg’s legal troubles are far from over, as he still faces civil lawsuits from both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
In addition, Eisenberg remains incarcerated due to a separate and unrelated conviction involving child sexual abuse material discovered during his arrest in late 2022.
On May 1, 2025, he was sentenced to nearly four years in federal prison after pleading guilty to the possession of such material, a serious offense that will keep him behind bars regardless of the Mango Markets ruling.
Despite the partial legal victory, Eisenberg’s future remains uncertain, as the government has not yet indicated whether it intends to refile the vacated charges.
Moreover, the case has reignited debate over the limits of DeFi enforcement, especially under a political climate that appears increasingly hesitant to aggressively prosecute crypto-related offenses.
With the Trump administration signaling a reduced emphasis on digital asset regulation, legal experts are now closely watching how this case may influence future enforcement in the decentralized finance space.
Ultimately, the judge’s decision underscores the legal challenges of applying traditional financial laws to emerging blockchain technologies, a space that continues to evolve faster than the regulatory frameworks built to govern it.