Could a recent criminal court case in the US involving digital asset trading assist Coinbase in its ongoing legal battle with the SEC? Last week, Avraham Eisenberg was found guilty in a landmark case of manipulating Mango Markets to unlawfully withdraw $110 million in digital asset commodities fraud.

On October 11, 2022, Eisenberg manipulated futures contracts, resulting in a 1,300% surge in just 20 minutes, enabling him to borrow $110 million against inflated assets. A federal jury in New York convicted him of commodities fraud, commodities manipulation, and wire fraud.

Described as an "applied game theorist," Eisenberg utilized a false identity to inflate the value of MNGO tokens and their futures contracts. His defense argued that his actions were legal under the decentralized finance platform's rules, which advise users to trade at their own risk.

Could this case assist Coinbase in its legal battle with the SEC?

Eisenberg's conviction for commodities fraud, rather than securities fraud, could bolster Coinbase's defense against the SEC's lawsuit. It highlights the absence of clear regulatory guidance from the SEC on the classification of digital assets, allowing Coinbase to argue that the regulator has left the industry to navigate a murky regulatory landscape on its own.

Furthermore, Eisenberg's prosecution under commodities laws suggests that certain digital assets, like MNGO tokens, may fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC) rather than the SEC. Coinbase could leverage this to challenge the SEC's broad authority over cryptocurrencies and tokens listed in its complaint.

By drawing parallels between the treatment of MNGO and tokens mentioned in the SEC's complaint, Coinbase could advocate for consistent regulatory treatment. It could also highlight the SEC's inconsistency in its approach to digital assets.

Additionally, Coinbase could urge the SEC to engage in transparent rulemaking to provide clarity on how securities laws apply to digital assets.

While Eisenberg's case offers potential support for Coinbase's defense, the unique facts of each case must be carefully considered. The court will assess arguments and allegations based on specific tokens and legal frameworks.

Although the SEC charged Eisenberg with violating securities laws, there have been no updates on the case. While Eisenberg's actions fall under the purview of the CFTC, the SEC has asserted jurisdiction over tokens similar to MNGO.

While Eisenberg's case may not establish a clear precedent, it underscores regulatory inconsistencies, potentially aiding Coinbase's defense by illustrating the complexities of US crypto regulation.

Ultimately, Eisenberg's conviction in commodities fraud adds a layer of complexity to the debate on digital asset regulation and may bolster Coinbase's legal position against the SEC.