A New York judge overturned fraud convictions against Avraham Eisenberg related to the 2022 Mango Markets exploit, ruling prosecutors failed to prove he made false representations to the platform. The court emphasized that Mango Markets operated through autonomous smart contracts rather than traditional contractual agreements, challenging existing frameworks for prosecuting DeFi-related financial activities.
This decision highlights the legal system’s struggle to apply conventional fraud statutes to decentralized finance mechanisms. Legal experts suggest the ruling could encourage clearer regulatory guidance about smart contract interactions and user responsibilities in DeFi ecosystems.
The outcome may delay similar prosecutions until lawmakers establish specific digital asset fraud statutes. However, the judge left room for civil liability claims, meaning exploit victims might still pursue recovery through alternative legal avenues.
