Prosecutors Push Back on Crypto Trader’s Bid to Overturn $100M Fraud Conviction

On Wednesday, September 18, 2024, federal prosecutors filed a response pushing back against a crypto trader’s request to overturn his fraud conviction related to draining over $100 million from the decentralized finance platform Mango Markets.

In their response filed in a New York federal court, prosecutors argued that Avraham Eisenberg is wrongly attempting to recast factual issues in his case as legal questions in his bid for acquittal. They said the jury was presented with a “mountain of evidence” during Eisenberg’s April trial and correctly found him guilty of commodities fraud, commodity manipulation, and wire fraud.

Prosecutors maintained that Eisenberg intentionally drove up the price of Mango Market’s MNGO token to increase the value of financial instruments, known as MNGO Perpetuals, that he held on the platform. This allowed him to borrow over $100 million that he had no intention of repaying. In their response, they argued Eisenberg had to misrepresent his intent to take out loans and give a misleading impression that he had sufficient collateral in order to carry out the scheme.

While Eisenberg claimed his conduct followed the rules of the underlying smart contract, prosecutors said this cannot create a legal exception for fraud. They also noted evidence showing that Mango Market developers would have intervened had they known Eisenberg’s true intentions, as code was later added to pause withdrawals during a similar large borrowing incident.

Prosecutors refuted Eisenberg’s other claims, such as that trades in the underlying asset did not constitute commodities fraud and that the financial instruments were not legally considered swaps. They maintained the jury was presented with factual evidence and reasonably concluded Eisenberg engaged in interstate wire fraud within the Southern District of New York jurisdiction. Denying his request for acquittal or a new trial, prosecutors said the jury instructions and arguments were properly handled.

Please contact BlockTribune for access to a copy of this filing.