A significant judicial ruling has reshaped a high-profile case concerning a substantial exploit within the decentralized finance (DeFi) sector. A federal judge has dismissed major fraud charges against Avraham Eisenberg, the trader accused of draining millions from the Mango Markets platform, citing critical procedural deficiencies in the prosecution’s case.
Dismissal on Jurisdictional Grounds
Judge Arun Subramanian determined that federal prosecutors in New York failed to establish a sufficient legal connection between Eisenberg’s actions, which were conducted from Puerto Rico, and the Southern District of New York. The court found no compelling evidence linking the alleged misconduct to activities within New York, leading to the vacating of two fraud convictions and the complete dismissal of a wire fraud charge.
The judge also stated that Eisenberg’s use of market manipulation tactics, specifically involving a price oracle, was not enough to warrant criminal liability, particularly given the absence of explicit platform rules governing such behavior.
Eisenberg’s Ongoing Incarceration
Despite the dismissal of these cryptocurrency-related charges, Eisenberg remains in custody. He is currently serving a four-year sentence for possession of child sexual abuse material, a separate legal matter unrelated to the Mango Markets case.
Reactions and Broader Implications
Eisenberg’s legal team lauded the court’s decision, describing the original charges as “fundamentally flawed.” Meanwhile, Mango Markets, already grappling with legal disputes and financial instability, has ceased its operations. The Department of Justice has not yet indicated whether it will pursue the dismissed charges in a different jurisdiction.
This ruling carries important implications for how U.S. courts approach cross-border cases involving decentralized platforms. It highlights the challenges prosecutors face when attempting to apply traditional legal frameworks to crypto ecosystems that inherently lack centralized oversight or clear geographical boundaries.
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