Avraham Eisenberg’s Mango Markets Fraud Charges Dismissed by US Court

A pivotal legal development in the crypto world has seen a U.S. court dismiss significant charges against Avraham Eisenberg, the individual connected to the notable 2022 exploit of Mango Markets. This decision marks a critical moment for how digital asset manipulations are legally defined and prosecuted.

Charges Dismissed by SDNY

In a ruling from the Southern District of New York (SDNY), Judge Arun Subramanian found the evidence presented insufficient to sustain accusations of fraud and commodity manipulation against Eisenberg in the Mango Markets case. The court further determined that the defendant’s actions did not fall within the SDNY’s jurisdiction. The judge noted that crucial evidence was missing to substantiate all charges, particularly as Eisenberg’s activities were conducted online from Puerto Rico, with no substantial actions recorded within New York.

Exploit vs. Fraud: The Legal Distinction

The core of Eisenberg’s defense centered on the argument that he merely leveraged a vulnerability within Mango’s smart contract code, rather than making any false representations. The defense maintained that his actions constituted an exploit of a system flaw, not a deceptive act aimed at defrauding individuals or entities. Judge Subramanian concurred with this stance, emphasizing that Mango Markets operated autonomously and without human intervention, thus making it legally incapable of being “deceived” in the traditional sense.

The 2022 Mango Markets Incident

Eisenberg was accused of manipulating the Mango Markets platform in October 2022. The allegations described how he purportedly used 5 million USDC to open opposing positions on MNGO futures, artificially inflating the asset’s price through purchases on various exchanges including FTX, Serum, and AscendEX. Following this, he allegedly withdrew over $100 million in cryptocurrencies from the platform, subsequently selling MNGO and profiting from the resulting price drop.

Previous Verdict and Current Implications

It’s important to note that on April 18, 2024, a jury had previously found Avraham Eisenberg guilty of fraud and manipulation, a verdict that could have led to a sentence of up to 20 years in prison. However, the recent dismissal of charges by Judge Subramanian effectively negates that previous outcome, underscoring the complexities and evolving interpretations within cryptocurrency-related legal proceedings.