Key Takeaways
- The decide sided with Eisenberg’s core protection which was that the exploit didn’t contain misrepresentation or deception, however reasonably a calculated use of overtly accessible DeFi mechanisms.
- The Division of Justice now faces a strategic resolution on whether or not to refile costs or attraction.
The decide sided with Eisenberg’s core protection which was that the exploit didn’t contain misrepresentation or deception, however reasonably a calculated use of overtly accessible DeFi mechanisms.
Eisenberg, who describes himself as an “utilized recreation theorist,” was initially discovered responsible in 2024 of inflating the MNGO token value by over 1,300% in minutes. Prosecutors stated he then used these inflated tokens as collateral to empty $110 million in crypto property from the platform.
The Division of Justice argued Eisenberg had manipulated Mango’s good contract-based lending system by artificially distorting market values. However Eisenberg’s authorized staff countered that Mango’s code operated with out human discretion and couldn’t legally be “deceived.”
Choose Subramanian rejected the DOJ’s principle {that a} permissionless protocol could possibly be the sufferer of fraud within the absence of any false assertion. “This wasn’t a case of lies or forgeries,” stated one authorized observer following the case. “It was a check of what fraud means within the age of autonomous code.”
The ruling additionally threw out the federal government’s declare that the case needs to be heard in New York. Eisenberg was positioned in Puerto Rico on the time of the trades, and Subramanian decided that neither the placement of a Mango consumer in Poughkeepsie nor a third-party vendor in Manhattan established enough jurisdiction.
Because of this, the court docket vacated Eisenberg’s convictions for commodities fraud and market manipulation and issued an acquittal on a 3rd cost. The Division of Justice now faces a strategic resolution on whether or not to refile costs or attraction.
Regardless of the win within the Mango Markets case, Eisenberg stays in jail. On Could 1, he was sentenced to almost 4 years after pleading responsible to possession of kid sexual abuse materials. That case, separate from the Mango investigation, emerged from proof seized throughout his preliminary arrest in December 2022. In accordance with court docket filings, he admitted to possessing over 1,200 pictures and movies.
Whereas the DOJ’s crypto-related prosecution has suffered a blow, Eisenberg nonetheless faces ongoing civil lawsuits from each the Securities and Trade Fee (SEC) and the Commodity Futures Buying and selling Fee (CFTC).
