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Mango Markets: the acquittal that was mostly a venue ruling

2026-09-12 · Illicit Finance A jury convicted Avraham Eisenberg on three counts over a $110 million exploit, and a judge undid all three. Coverage recorded that as an acquittal, but the opinion does two different things to two different sets of counts, and only one of…

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2026-09-12 · Illicit Finance

A jury convicted Avraham Eisenberg on three counts over a $110 million exploit, and a judge undid all three. Coverage recorded that as an acquittal, but the opinion does two different things to two different sets of counts, and only one of them stops a retrial.

Key findings

  • The remedies are different and the difference is everything. Judge Arun Subramanian vacated counts one and two and entered a judgment of acquittal on count three. Vacatur on venue permits reprosecution in a proper district. The acquittal does not.
  • The court said so, citing the Supreme Court. The opinion quotes Smith v. United States, 599 U.S. 236 (2023): a venue-based reversal “plainly does not resolve the bottom-line question of criminal culpability.”
  • Eisenberg lost nearly every merits argument he made. The court found sufficient evidence of intent to manipulate, sufficient evidence of an interstate wire, sufficient evidence of materiality, no rule-of-lenity problem, and no defective jury charge.
  • The wire fraud count failed on falsity, and the reason is structural. The court found that “at the time of Eisenberg’s offense, Mango Markets had no terms and conditions, policies, or rules regarding either manipulation or the borrowing of funds.”
  • The holding is narrower than “code is law” and more useful. It is not that exploiting a protocol can never be fraud. It is that a fraud charge needs a false statement, and a platform with no terms gives you nothing to be false about.

Case file

Field Value
Matter United States v. Avraham Eisenberg
Court S.D.N.Y., Judge Arun Subramanian
Docket 1:23-cr-00010 (AS)
Indicted 9 January 2023, three counts
Convicted Jury verdict, April 2024, after a nine-day trial (Dkt. 152)
Rule 29 motion Dkt. 182
Opinion and Order Dkt. 220, filed 23 May 2025, 35 pages
Amount at issue Over $100 million as charged; commonly reported as $110 million
Disposition Counts 1 and 2 vacated (venue). Count 3 judgment of acquittal (falsity)
Posture as of 3 August 2026 Government appeal reported but not verified against the Second Circuit docket. This article addresses the Mango Markets prosecution only

What the record shows

What was Eisenberg charged with?

On 9 January 2023 the government charged Avraham Eisenberg in a three-count indictment in the Southern District of New York over conduct on a decentralized exchange called Mango Markets, alleging he defrauded the platform of over $100 million in cryptocurrency. After a nine-day trial a jury convicted him of commodities fraud, commodities manipulation, and wire fraud. He moved under Federal Rule of Criminal Procedure 29 for a judgment of acquittal on the ground that the evidence was insufficient.

Judge Arun Subramanian granted the motion in an Opinion and Order filed 23 May 2025. The closing paragraph of the opinion states the disposition exactly: “Eisenberg’s convictions on counts one and two are vacated. The Court will enter a judgment of acquittal on count three.” [P]

Why vacatur on two counts and acquittal on the third?

Because they failed for different reasons, and the opinion is explicit that this matters.

Counts one and two, the commodities charges, failed on venue. Eisenberg conducted the entire scheme online from Puerto Rico. The court applied the Second Circuit framework requiring a court to “first identify the conduct constituting the offense and then determine where that conduct occurred”, separating essential conduct elements from circumstance elements. It found the evidence insufficient to place essential conduct in the Southern District of New York. [P]

The court then addressed what that means, citing the Supreme Court directly:

The reversal of a conviction based on a violation of the Venue or Vicinage Clauses, even when styled as a “judgment of acquittal” under Rule 29, plainly does not resolve the bottom-line question of criminal culpability.

That is Smith v. United States, 599 U.S. 236, 253 (2023), quoted in the opinion immediately after the venue holding. A venue failure is a failure to prosecute in the right place. It is not a finding that the defendant did not do it, and the Double Jeopardy Clause does not bar trying the same counts in a district where venue lies.

Count three, wire fraud, is different. The court held there was insufficient evidence of falsity, which is a merits holding on an element of the offense. That is why the disposition is a judgment of acquittal rather than vacatur, and an acquittal on the merits ends the count permanently.

What Eisenberg lost

Reading the opinion as a defense victory across the board gets it backward. The section headings record the outcome of each argument, and most of them went against him.

Argument Section Outcome
Insufficient intent to manipulate MNGO II.A Rejected. Evidence was sufficient
Rule of lenity should apply II.B Rejected. Does not apply
Defective jury charge and improper summation II.C Rejected. No new trial
No interstate or foreign wire III.A Rejected. Evidence was sufficient
Insufficient materiality, commodities fraud IV.B Rejected. Evidence was sufficient
Venue in the S.D.N.Y. I.A, III.A Accepted
Insufficient falsity, wire fraud IV.A Accepted

On the interstate wire point, the jury heard that Eisenberg used a Polish IP address to access AscendEX and FTX, two of the three exchanges feeding the price oracle for the MNGO Perpetual. [P] The court held that was enough for a reasonable jury to find a foreign wire.

The last substantive paragraph of the opinion disposes of the commodities-fraud materiality argument in terms that are not ambiguous: the evidence permitted the jury to conclude that “Eisenberg’s manipulation increased the value of his collateral on Mango Markets, which in turn caused the platform’s algorithm to permit him to borrow and withdraw far more cryptocurrency than he otherwise would have been allowed to. Eisenberg’s argument for acquittal on the commodities-fraud charge fails.”

Why the wire fraud count failed

Wire fraud requires a scheme to defraud, and a scheme to defraud requires a material misrepresentation, which can be a false statement, a fraudulent omission, or a half-truth.

The government identified two alleged misrepresentations, summarized in its own closing as “Lying about the value of the collateral and lying about borrowing, that’s the fraud.” First, that Eisenberg deceived Mango Markets into believing he was taking out a loan when he intended to steal. Second, that he misrepresented the value of his collateral.

The court set out what “borrowing” on Mango Markets consisted of. A user clicked withdraw or borrow, which led to the same screen. Toggling a switch indicated an intention to borrow rather than withdraw one’s own assets. The program then automatically ran a risk calculation against the account value to confirm the withdrawal was sufficiently collateralized. The user clicked through a screen showing amounts and “account health”, clicked Withdraw, and received the cryptocurrency.

Then the finding that decides the count:

At the time of Eisenberg’s offense, Mango Markets had no terms and conditions, policies, or rules regarding either manipulation or the borrowing of funds.

The court cites the trial transcript and a defense exhibit for that. It also notes that the stated consequence of not repaying a loan was liquidation.

Cite as: Max Avery, “Mango Markets: the acquittal that was mostly a venue ruling”, maxavery.org, 12 September 2026. Primary source: United States v. Eisenberg, No. 1:23-cr-00010 (AS) (S.D.N.Y.), Opinion and Order, Dkt. 220, filed 23 May 2025.

What I think is going on

The reporting on this case collapsed a careful 35-page opinion into “judge overturns crypto conviction”, and in doing so it lost the only two things a reader needs.

The first is that the government can still retry counts one and two. Not as a technicality someone might argue for, but as a proposition the judge wrote into the opinion by citing Smith on precisely this point. If prosecutors want the commodities counts, they can bring them where Eisenberg actually acted. Describing him as acquitted, full stop, tells a reader the matter is closed when two-thirds of it is procedurally alive.

The second is that Eisenberg’s substantive defense mostly failed. He argued the conduct was not manipulation, that the statute was too vague to apply, that the jury was misdirected, and that his collateral inflation was immaterial. The court rejected all of it. The judge found that his manipulation caused the platform’s algorithm to hand him money it would not otherwise have released. That is a finding about the merits, and it is the opposite of a court blessing the exploit.

So what did he actually win on? A place, and a proposition about speech.

The falsity holding is the part with legs, and I think it is being read too broadly and too narrowly at once. Too broadly, because it is not “code is law” and it is not a ruling that draining a protocol is lawful. The commodities counts survived on the merits precisely because the manipulation was real. Too narrowly, because the mechanism the court identified generalizes further than Mango Markets.

Fraud is a crime of communication. It needs a statement, made to somebody, that is false. When you interact with a smart contract, the set of things you can say to it is the set of inputs its interface accepts, and clicking a toggle labeled “borrow” is not an assertion that you intend to repay unless something somewhere says it is. On a platform with terms of use, that something exists: the terms are the representation, and violating them can be the falsehood. Mango Markets had none. The court found, as a matter of trial evidence, that there were no rules about manipulation and no rules about borrowing. There was therefore no statement to falsify, and the only stated consequence of not repaying was that you get liquidated.

The practical lesson for prosecutors is not subtle: the presence or absence of terms of use is now a fact that decides counts. The lesson for protocols is the same fact from the other side. A DeFi platform that publishes no terms has, on this reasoning, made itself harder to defraud in the legal sense, which sounds like a benefit right up to the moment it means the person who drained it cannot be charged with defrauding you.

I would not build a thesis on this opinion surviving. It is a district court decision, the government has reportedly appealed, and the Second Circuit may take a different view of whether an automated system can be deceived. But as of today it is the most careful judicial treatment of the question of whether you can lie to a machine, and its answer is that you can only lie to one that claims something first.

What reduces your exposure

This is a prosecution story rather than a holdings story, and the honest reading is that nothing about how you hold assets changes any of it. What changes is what you should expect from a venue after something goes wrong.

Read whether a platform has terms at all. Not for the usual reason. Terms of use are routinely one-sided and rarely worth the scroll. But this opinion makes their existence load-bearing for whether conduct against the platform can be charged as fraud. A venue with no published rules about manipulation has fewer routes to a criminal remedy when somebody manipulates it, and you are a creditor of that outcome.

Treat “the exploiter was convicted” as a weaker fact than it sounds. A conviction can be undone on venue years later, and a Rule 29 motion is decided on the evidence the government actually put in, not on what happened. If your recovery depends on a criminal forfeiture, your recovery depends on the prosecution surviving post-trial motions and an appeal.

Assume the recovery timeline is measured in years and may end in nothing. The exploit here was October 2022. The verdict was April 2024. The opinion undoing it was May 2025. An appeal runs on top of that. Structuring around a hoped-for forfeiture is not planning.

None of that reduces the chance of a protocol being drained while you are in it. It changes what you should assume about the aftermath, which is the part people get wrong.

Sources

Disclosure. Max Avery is affiliated with Digital Ascension Group (DAG). Investment advisory services are offered through DAG Wealth, an SEC-registered investment adviser (CRD No. 328627). Registration does not imply a certain level of skill or training. DAG is not a law firm and does not provide legal or tax advice. Custody arrangements with third-party independent qualified custodians reduce certain risks but do not eliminate them. Nothing here is investment, legal, or tax advice, or a recommendation to buy or sell any asset. This article describes matters of public record; charges are allegations and defendants are presumed innocent unless and until proven guilty.

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