Crypto Trader’s Convictions Overturned in Landmark Mango Markets Case: A Blow to U.S. Crypto Enforcement

New York, NY, May 24, 2025 — In a significant setback for U.S. cryptocurrency enforcement, a federal judge has vacated the fraud and manipulation convictions of Avraham Eisenberg, a trader accused of exploiting the Mango Markets decentralized finance (DeFi) platform to siphon $110 million. U.S. District Judge Arun Subramanian ruled on Friday that the trial evidence failed to support the jury’s verdict, citing insufficient proof of false representations made to the platform.

The decision, which also saw Eisenberg acquitted of a third charge, marks a pivotal moment in the first U.S. criminal case involving crypto manipulation. As the Justice Department weighs whether to retry Eisenberg on the vacated charges, the ruling raises questions about the legal boundaries of DeFi transactions and the Trump administration’s plans to scale back crypto enforcement.

A Legal Victory for Eisenberg

Eisenberg, a 29-year-old self-described “applied game theorist,” was convicted last year of commodities fraud, manipulation, and wire fraud for orchestrating trades that inflated the price of Mango Markets’ MNGO token by 1,300% in just 20 minutes on October 11, 2022. Prosecutors alleged he used a false identity to manipulate token prices and exploit a platform feature to “borrow” $110 million in cryptocurrencies without intent to repay.

Eisenberg’s defense argued that his actions were legal, exploiting a flaw in Mango Markets’ permissionless smart contracts rather than committing theft. Judge Subramanian agreed, stating, “There was insufficient evidence of falsity,” as the platform lacked terms and conditions that could render Eisenberg’s actions fraudulent. The ruling has sparked discussions among crypto enthusiasts, with some praising the decision as a validation of DeFi’s open nature, while others worry it could embolden exploitative trading practices.

Did You Know?
Decentralized finance (DeFi) platforms like Mango Markets operate without traditional intermediaries, using smart contracts on blockchains to automate financial transactions, with global DeFi market value exceeding $80 billion in 2025.

Jurisdiction and Enforcement Challenges

The case also faced scrutiny over jurisdictional issues. Eisenberg, who executed his trades from Puerto Rico, challenged the Manhattan federal prosecutors’ authority, arguing he had no direct connection to New York. The government cited a Manhattan-based vendor and a Poughkeepsie resident affected by the trades, but Subramanian rejected these claims, noting that Eisenberg “didn’t make trades in New York, call, or email anyone in New York.” The ruling underscores the complexities of prosecuting crypto-related crimes in a decentralized ecosystem.

Recent online sentiment reflects growing debate over whether federal prosecutors or regulatory bodies like the SEC and CFTC, which have pending civil cases against Eisenberg, are better suited to handle such cases, especially as the Trump administration signals a softer stance on crypto enforcement.

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Broader Implications for Crypto Regulation

The Eisenberg case, the first to test DeFi transactions before a U.S. criminal jury, highlights the regulatory gray area surrounding decentralized platforms. Mango Markets, run by a decentralized autonomous organization (DAO), allows users to borrow, lend, and trade cryptocurrencies via smart contracts. Eisenberg’s acquittal could set a precedent for how similar cases are handled, particularly as the Justice Department grapples with the administration’s directive to defer crypto enforcement to regulators.

Meanwhile, Eisenberg remains in prison, serving a four-year sentence for an unrelated child pornography possession conviction following his arrest in Puerto Rico in December 2022. The crypto community is closely watching whether the government will pursue the vacated charges or shift focus to civil penalties, with real-time discussions suggesting a split between those who view Eisenberg’s actions as innovative and those who see them as predatory.