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By Matthew Russell Lee, Patreon Maxwell Book

SDNY COURTROOM, April 9 -  In the U.S. District Court for the Southern District of New York on December 27, 2022 a complaint was ordered unsealed charging Avraham Eisenberg with commodities fraud. He was arrested in Puerto Rico.

Inner City Press is covering the case(s), often as the only media in the Mag Court. Related Mag Court live-tweeted thread (more on Patreon here) vlog here

On January 9, Inner City Press came across the CFTC case against Eisenberg, just filed (still with no title in PACER) and put it out on Patreon here. The 21-page civil complaint is, as is often the case, more detailed...

 On April 12, the US Attorney's Office filed a motion to intervene and stay the Mango Labs v. Eisenberg case, saying that neither side opposed the stay. The US seeks a "full stay until the conclusion of the parallel criminal case."

More on Substack here.

On June 14, Judge Berman held a proceeding to pick a trial date. Inner City Press covered it, thread here.

  On July 27 Eisenberg moved to dismiss and to suppress; he submitted a 7-page affadavit including "In the evening of December 26, 2022, I arrived by airplane at The Luis Munoz Marin International Airport in Carolina, Puerto Rico, just outside of San Juan. 3. I disembarked the airplane with my luggage, a backpack and a suitcase. 4. I walked to the United States Customs counter. There, I was questioned by a United States Customs and Border Protection ("CBP") agent regarding the purpose of the trip I had just completed and general questions about the contents of my luggage. 5. The CBP agent directed me to a specific area several feet away from the Customs counter for additional questioning, and there another CBP officer opened the suitcase and backpack. I recall the agent pulling out the laptop and asking me to turn it on" - full affidavit on Patreon here.

Watch this site.

The  complaint is on Patreon here

On February 3, Eisenberg in a yellow jump suit and feet shackled was brought into Magistrates Court at SDNY. He had, at least for the proceeding, the same lawyer Ethereum developer Virgil Griffith had in the North Korea sanctions case he pled guilty in: Brian Klein.

  His parents were in the gallery and he looked at them, from two rows away. The prosecutor said that (unlike on Sam Bankman-Fried) they were seeking detention, and that he was consenting at least for now.  Here is Inner City Press' thread.

There's more detail on Patreon here.

On February 14, there was a very brief arraignment, thread here

On November 2, 2023 Eisenberg's counsel wrote it seeking to push the December 4 trial to March or April. They said Eisenberg was moved from Essex to the MDC, and not allowed to bring his discovery material with him. The SDNY prosecutors acknowledge that's a problem, but want only a one-week delay to December 11 - or to April, citing an unrelated murder trial.

On November 3, it was moved to April 2024. And on November 21, Judge Amit Subramanian set out questions to be answered in early December, including "Whether any transaction involving USDC, even where it is used as a medium of exchange to purchase something that is not a commodity, is nevertheless a “contract of sale of any commodity” given the statutory and regulatory definitions (see Dkt. 37 at 5-6);  Whether the indictment alleges manipulation as to the price of USDC, deceptive conduct affecting the USDC market, or deceptive conduct otherwise “in connection with” a contract of sale of USDC (see Dkt. 37 at 7–8);  Whether the indictment alleges a manipulative device “in connection with . . . any swap” where Eisenberg was the party on both ends of the MNGO Perpetuals" - full order and questions on Patreon here.

On March 14, 2024, there was a hearing on motions in limine and experts. Inner City Press live tweeted here

 AUSA: We're getting toward a "code is law" inference...Question as to terms of service, in defi, who the duty is between... They will be arguing Mango Markets should have seen this coming Eisenberg's lawyer: What he did was not criminal.

On March 28 there was the final pre-trial conference, and Inner City Press went, here:

OK - now in criminal crypto case of US v Avi Eisenberg, at final pre-trial conference. He was brought in by US Marshals

Judge: What about they Touhy request?

Defense: The Government only gave us their objections yesterday... They are trying to use our client's tweets against him. AUSA: We have been making nightly disclosures of 3500 material

There was some back and forth on logistical issues - will Eisenberg come forward to sidebars with the judge? Defense: No, that would be a circus [the Marshals would go up with him, highlighting that despite the suit he is in detention].

We will continue to cover the case.

In a parallel civil case, on February 24, 2023 there was an hour and a half argument in Mango Labs v. Eisenberg before Judge Lewis J. Liman. Inner City Press live tweeted...

  Ultimately Judge Liman extended the TRO for two weeks, after for two letters by Tuesday, and said he will rule on March 10.

On March 10, Inner City Press was there, thread here

On March 27, one of Eisenberg's counsel wrote in supporting his subpoena of Mango Markets founders Dafydd Durairaj and Max Schneider, noting that Durairaj "is expected to be a critical government witness."

On April 8, just before 5 pm, the 12 jurors and 3 alternates were selected. Inner City Press was there, observing from the gallery as Eisenberg whispered in the ear of one then another of his five lawyers, going over exhibits of text messages on the laptop before him. Judge Subramanian approved the defense's request to bring their client snacks, but deferred judgment on a number of exhibits.

On April 9 the trial began in earnest. Here were the opening arguments, thread:

Judge Subramanian, summary legal instructions: Jurors, you are to be impartial... Objections are not evidence... But you can consider circumstantial evidence.  Jurors, do not post anything about this case on the Internet.

 Judge: OK, opening arguments. Ms. Huang? Assistant US Attorney Tian Huang: Consider this scam. A person sells a fake diamond ring, worthless plastic. The con man disappears and runs off. This case is a modern twist on that. That man, Avraham Eisenberg? He ran

AUSA: He inflated the price of crypto currency by 1000% in 20 minutes. He convinced Mango Markets he owned a lot, and conned Mango Markets. He borrowed over $110 million of crypto currency. He wasn't really borrowing it - he was stealing it. He ran off with crypto

AUSA: He committed fraud and market manipulation. He searched those words. During the fraud? He hid his true identity, by pretending to be a Ukrainian woman. The day after, he fled the country. There were 4 frauds. He found a target: Mango Markets

AUSA: Crypto currencies can be valuable. Reallly valuable. Mango Markets had a big fault of crypto, worth over $110 million. The defendant needed a fake diamond ring to get a loan. So he manipulated the price. The fake trade:  he placed a big bet with himself

 AUSA: He placed a bet that the crypto Mango would up. But he was on both sides of the trade. He was betting with himself. Mango Markets didn't know. The manipulation? The price of Mango had to go up. He pumped it. You'll see that was the word he used

 AUSA: The defendant planned to pump up the price of Mango. Then he used the fake bet to get a loan. It was a fake diamond ring. The execution of the crime: he planned for weeks, but carried it out in an hour, to run away with $110 million in crypto

AUSA: He took over a crypto currency that was in the name of a Ukrainian woman, and set up others. Then he made the fake bet. He used two accounts on Mango Markets to make a fake bet on the crypto currency called Mango. It was huuuge

AUSA: He pumped up the price of Mango. He bought tons of it. And it worked. It went up 1000% in 20 minutes.... Once he had stolen the money, he bought a plane ticket leaving the very next day. This was a getaway

 AUSA: He was trying to get out of the country as fast as he could, less than 24 hours after his heist. He then offered to give some of the money back- if Mango Markets would not report him to the authorities. They agreed, but still lost tens of millions of dollars

AUSA: A few months later when he came back to the US he was arrested and charged with the fraud you are going to consider in this trial. You'll hear from the victims, the customers of Mango Markets. You will see messages, you will hear about crypto programs

 AUSA: At the end, what that man did boils down to something far older: plain fraud. It will come in piece by piece. At the end we will speak again, how it fits together. Do three things: pay attention, listen to the judge and use your common sense. Find him guilty

 Judge: Mr. Talkin?

Eisenberg's lawyer Sanford Talkin: Mango Markets and Avi Eisenberg, they weren't operating in the regular financial world. It is speculative, they go in with their eyes open. Sometimes the returns are astronomical. He executed a successful trade

 Talkin: He risked $13 million of his own dollars. This was a risk by him. During this trading strategy, at any moment, he could have lost everything. It was not a sure bet, and it wasn't a secretive bet. The bet he made could be seen by anyone

Talkin: Every trade has a winning side, and every trade has a losing side. It is not illegal to win, to execute a trade that is to your benefit. Mango Market is computer program, a series of smart contracts. They execute on the blockchain, a public ledger

 Talkin: They will try to tell you USDC is a commodity, even if Mango is not. But it is not. Nor are these swaps. So, the government can't even get out of the gate on the first two counts of this indictment. And of course the trade was anonymous. But that's Mango

Talkin: These loans are automatically paid back. There's a process in place. The collateral is taken. If it's not enough, there's an insurance fund. If that doesn't happen, everyone knows the balance will be spread out.

Talkin: The borrower does not have to profess to intend to repay the loan, on Mango Market. The government will try to get you to believe Avi Eisenberg was obligated. But he was not. In the trial, you'll learn about an account at Circle, in the name of Eisenberg

 Talkin: Avi was being threatened online. He had discussions with Mango Markets and he made the decision to let things cool off. And he came back, under his own name. He gave back $67 million to Mango Markets. Intent is key in this case

Talkin: He does not deny he did these trades. He does not deny he made a profit. But he denies he committed a crime, because he did not. He executed a winning trading strategy. He is not guilty. Thank you.

More with analysis on Substack here

Watch this site.

Inner City Press will have more on these cases.

The criminal case is US v. Eisenberg, 23-cr-10 (Subramanian)

The stayed CFTC case is Communities Futures Trading Commission v. Eisenberg, 23-cv-173 (Schofield)

The Mango Labbs civil case is Mango Labs, LLC v. Eisenberg, 23-cv-665 (Liman)

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