- Prosecutors have appealed the judge’s decision that overturned the conviction of Avraham Eisenberg for a 2022 exploit of Mango Markets.
- A jury in 2024 convicted Eisenberg of commodities fraud, market manipulation and wire fraud over a roughly $110 million exploit.
- Federal Judge Arun Subramanian vacated the commodities convictions and acquitted Eisenberg of wire fraud, saying the protocol’s code and lack of terms undercut fraud claims.
- Prosecutors argue the judge ignored evidence, including a user guide and standard meanings of “borrow,” and have asked an appellate court to reverse the acquittal.
- Prosecutors say the case raises broader questions about applying traditional fraud law to blockchain-based, self-executing platforms.
Prosecutors have appealed the acquittal of Avraham Eisenberg after a federal judge last year vacated his commodities-fraud convictions and acquitted him of wire fraud in connection with a October 2022 exploit of Mango Markets. A jury had found Eisenberg guilty in 2024 of commodities fraud, commodities market manipulation and wire fraud for a scheme that prosecutors say yielded about $110 million in crypto. The appeal argues the judge’s decision was legally wrong and “would unsettle traditional understandings of fraud.”
Prosecutors say Eisenberg inflated the value of Mango Markets’ token, MNGO, by trading with himself and then used MNGO perpetuals as collateral to borrow roughly $110 million from the protocol’s users “with ‘no intention of repaying them,’” according to the original charges. The government argued pressing the platform’s “borrow” function created a false impression of collateral value; the judge disagreed.
Judge Arun Subramanian wrote that the protocol was a self-executing DeFi service with no terms of service and that the platform’s mechanics automatically measured collateral value. The judge said, “There was no evidence at trial that Mango Markets required any user to promise that they would repay funds as a condition of borrowing against their assets, so this isn’t a case where ‘a contractual promise was made,’” and that “there was no evidence that the ‘borrow’ function on Mango Markets entailed an obligation to repay — or any other obligation for that matter.”
Prosecutors counter that the plain meaning of “borrow” implies repayment and that the trial record included a user guide stating borrowers must pay interest and “maintain a Health Ratio above 0%” until repaying the loan. They wrote the judge “ignored critical evidence” and warned his view “would unsettle traditional understandings of fraud.” Prosecutors also emphasized that the platform’s code was still human-controlled and could be changed or paused in response to the scheme, writing that “the algorithm was just computer code, which was not meaningfully different from software programmes that people use every day.”
A photo shows crypto deposited in Mango Markets plunged after the exploit; the image is available here. For tips or contact information for the reporting party, see the reporter contact.
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