A federal judge has thrown out major fraud charges against Avraham Eisenberg, the trader accused of draining millions from DeFi platform Mango Markets, citing jurisdictional flaws in the government’s case.
Judge Arun Subramanian ruled that New York prosecutors failed to prove that Eisenberg’s actions—carried out from Puerto Rico—had sufficient legal ties to the Southern District of New York. The court found no evidence linking the exploit to New York-based activity, invalidating two fraud convictions and dismissing a wire fraud charge outright.
Eisenberg’s use of a market manipulation tactic involving a price oracle was not enough to support criminal liability, the judge said, particularly given the platform’s lack of defined rules governing such behavior.
Though Eisenberg’s crypto-related charges were largely struck down, he remains in prison, serving a four-year sentence related to possession of child sexual abuse material—an unrelated case.
His legal team welcomed the ruling, calling the prosecution “fundamentally flawed.” Meanwhile, Mango Markets, already battered by legal disputes and financial instability, has since shut down operations. The Justice Department has yet to announce if it will pursue the vacated charges in another jurisdiction.
The ruling could have broader implications for how U.S. courts approach cross-border cases involving decentralized platforms, especially as prosecutors attempt to apply traditional legal frameworks to crypto ecosystems with no centralized oversight or geographic boundaries.
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