Judge Tosses Mango Markets Fraud Case Against Eisenberg—DeFi Dodges Another Bullet

In a ruling that’ll fuel both cheers and eye-rolls across crypto, a judge just axed fraud charges against Avraham Eisenberg—the trader accused of orchestrating a $110M exploit on Mango Markets. The DeFi ‘genius’ defense? It was all legal arbitrage. Sure, and Wall Street’s flash crashes are just ‘market feedback.’

The decision hinges on whether manipulating decentralized protocols counts as fraud when the code ‘allowed’ it. Spoiler: the judge says no. Another win for ‘this isn’t your grandpa’s securities law’—until the next exploit drains Main Street’s crypto savings.

Meanwhile, Mango’s token barely twitched on the news. Because nothing says ‘healthy market’ like shrugging off nine-figure heists.

Why Mango Markets’ Design Helped Eisenberg Walk Free

Mango Markets operates on decentralized, permissionless smart contracts. These systems let anyone interact with the protocol without approval. That feature—seen as a strength in DeFi—became a legal shield for Eisenberg. His lawyers argued that he only used what was available to him, without lying or hacking.

Judge Subramanian agreed, saying the code executed exactly as it was designed. Since there was “insufficient evidence of falsity,” Eisenberg couldn’t be found guilty of fraud. The DeFi world often promotes the idea that “code is law.” In this case, that concept proved powerful in court. The ruling is a warning for developers: smart contracts need better safeguards, not just good intentions.

Mango Markets Fraud Charges Dropped, But Civil Battles Remain

While Eisenberg won big in the criminal case, he’s not free yet. The SEC and CFTC have both filed civil lawsuits against him. These agencies focus on financial regulation and are likely to argue that Eisenberg’s tactics still broke rules—even if they weren’t criminal. These cases could lead to fines, bans, or future restrictions in trading.

The U.S. government also hasn’t confirmed if it will refile the vacated charges. For now, signs point to no. The Trump administration has taken a softer stance on crypto enforcement. Several high-profile crypto lawsuits, including ones involving Coinbase and Ripple, have already been dropped. That political climate may work in Eisenberg’s favor.

From DeFi Exploit to Disturbing Crimes

Beyond the Mango Markets case, Eisenberg’s legal issues are far from over. In a completely separate case, he pleaded guilty to possessing child pornography. Discovered during his arrest for the DeFi exploit, authorities found over 1,200 explicit images and videos on his devices. On May 1, 2025, he was sentenced to nearly four years in prison for that crime.

This casts a long shadow over his legal win in the crypto world. While he may have avoided fraud charges for the Mango Markets exploit, his personal record remains deeply troubling. His prison time now stems from these unrelated, yet far more serious, charges.

What the Mango Markets Case Means for DeFi

The Mango Markets exploit and its legal fallout send a strong message to the DeFi space. Permissionless doesn’t mean lawless—but it does blur lines. This case shows how poorly written code can lead to massive financial losses with little legal recourse. Eisenberg found and used a loophole. He didn’t break the code. He used it exactly how it was written.

For developers, this is a wake-up call. Legal systems still struggle to define fraud in DeFi. Until better regulations and technical safeguards are in place, similar exploits could follow. In the end, the Mango Markets case is less about Eisenberg—and more about how DeFi must evolve to survive.