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A Manhattan federal judge on Friday threw out the conviction of Avraham Eisenberg, a crypto trader found guilty of defrauding Mango Markets of $110 million, ruling that prosecutors failed to prove the scheme was tied to New York or that the platform was deceived.

U.S. District Judge Arun Subramanian vacated Eisenberg’s convictions for commodities fraud and manipulation and acquitted him of wire fraud, saying the government did not present sufficient evidence to sustain the jury’s April 2024 guilty verdict. The ruling marks a rare post-verdict acquittal in a high-profile cryptocurrency case.

“From the beginning, we said this case was fatally flawed,” Eisenberg’s attorney Brian Klein of Waymaker LLP told Law360. “We are very pleased for Avi that the judge granted our motion and dismissed the case.”

The U.S. Attorney’s Office for the Southern District of New York declined to comment.

Eisenberg was accused of manipulating the price of Mango Markets’ MNGO token to inflate his collateral, enabling him to borrow over $100 million from the decentralized trading platform, which he never repaid. But Judge Subramanian found no clear connection between Eisenberg’s trades and the Manhattan venue.

Prosecutors pointed to HD Consulting, a vendor with Manhattan operations, as being involved in Eisenberg’s transactions. But testimony revealed the firm merely performed quality control and was not critical to the execution of trades. “Just saying that HD Consulting’s functions are ‘roughly very akin’ … can’t put enough lipstick on this pig,” the judge wrote.

Additionally, the government’s claim that Eisenberg transmitted a false price signal to a Mango Markets user in Poughkeepsie didn’t establish venue either, the judge found.

On top of the venue issues, the judge ruled the wire fraud conviction couldn’t stand because the government failed to show Eisenberg misrepresented anything to Mango Markets. His trades, the court found, followed the platform’s smart contract rules, and there was no evidence he agreed to repay borrowed funds or violated any written policies.

“On a platform with no rules, instructions, or prohibitions about borrowing,” the judge wrote, “the government needed more to show that Eisenberg made an implicit misrepresentation.”

Eisenberg had also argued for a new trial due to alleged errors in jury instructions and misleading statements by prosecutors. Judge Subramanian rejected that request but said it was moot in light of his acquittals.

While Eisenberg was spared from sentencing in the Mango Markets case, he is still serving about 4⅓ years for a separate conviction for possession of child pornography, discovered during his arrest in this case.

Civil enforcement actions filed by the SEC, CFTC, and MNGO token holders remain on hold pending resolution of the criminal matter.

The case is U.S. v. Eisenberg, No. 1:23-cr-00010, in the U.S. District Court for the Southern District of New York.