Legal Appeal by Avraham Eisenberg

Convicted Mango Markets exploiter Avraham “Avi” Eisenberg is asking a court to throw out fraud and commodity-related charges and requests a new trial.

In a 77-page motion filed earlier this week, Eisenberg’s lawyers argued that the Southern District of New York was not the right venue and said the government didn’t prove Eisenberg intended to manipulate the price of a perpetual futures contract on decentralized crypto exchange Mango Markets.

The evidence was unequivocal that Mr. Eisenberg was at all relevant times—an amount of time that was rather circumscribed as all of the relevant trading and withdrawal activity took place in a roughly hour-long period—situated in or around Puerto Rico and acting alone,” his lawyers said. “Faced with a total lack of evidence as to venue, the government resorted to mischaracterizations of the facts and the law in its summation.”

Prosecutors said Eisenberg acquired $110 million worth of crypto by “artificially manipulating” the price of perpetual futures contracts, called MNGO Perpeutals. They said he then bought a lot of MNGO, the exchange’s native token, using the stablecoin USDC to increase the price of MNGO and in turn the price of MNGO Perpetuals. Mango Markets lost around $116 million worth of funds in the exploit. Eisenberg was arrested in December 2022 in Puerto Rico.

Eisenberg took responsibility a few days after the incident in October 2022 and said his actions were part of a legal, “highly profitable” trading strategy that used Mango Markets as designed. Eisenberg later returned $67 million in funds to Mango Markets, and the protocol’s community allowed him to keep $47 million in a governance vote.

His trial started on April 9 and lasted about a week. There, Eisenberg’s defense argued that he enacted a lawful “winning” trading strategy, but prosecutors said it was fraud.

Eisenberg’s lawyers said the government didn’t prove that the Commodities Exchange Act applied to the case, so the commodities convictions should be dismissed. Prosecutors didn’t show that MNGO Perpetual was a swap and not “exclusively a security.” On the commodities manipulation conviction, his lawyers said Eisenberg did not have the intent to manipulate MNGO Perpetual’s market price.

The trial evidence proved that this price was entirely irrelevant to Mr. Eisenberg because he never made any attempt to sell any of his contracts, instead profiting from his ability to withdraw and borrow against the value of his unclosed positions,” the lawyers said.

Sentencing is set for Nov. 13, according to court filings.