The Mango Markets exploit shook the DeFi world in 2022. Avraham Eisenberg pulled off a $110 million maneuver by inflating the price of Mango’s MNGO token over 1,300%—all within minutes. He then used the pumped-up token as collateral to withdraw massive funds from the platform. It was a classic DeFi exploit, but Eisenberg claimed it was legal strategy, not fraud.
A U.S. judge now agrees. On May 17, Judge Arun Subramanian vacated Eisenberg’s convictions for commodities fraud and market manipulation. The ruling emphasized that Mango Markets, as a permissionless DeFi protocol, cannot be misled in the traditional sense. According to the court, no materially false statements were made. In the eyes of the law, what Eisenberg did wasn’t deception—it was code exploitation.
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.