Mango DAO Votes on $223,228 Settlement with SEC over Securities Violations

TLDR

• Mango Markets, a decentralized crypto exchange on Solana, is considering a settlement with the SEC over alleged securities law violations.
• The proposed settlement includes a $223,228 civil penalty and requires destroying MNGO tokens and delisting them from exchanges.
• The Mango DAO opened voting on the settlement proposal, which has already reached quorum with unanimous support.
• Mango Markets has been under investigation by the SEC, DOJ, and CFTC since a $110 million exploit in October 2022.
• The settlement, if accepted, could impact Mango Markets’ future operations as MNGO is its primary governance token.

Mango Markets, a decentralized cryptocurrency exchange built on the Solana blockchain, is considering a settlement offer with the U.S. Securities and Exchange Commission (SEC) over alleged violations of securities laws.

The exchange’s governing body, Mango DAO, opened voting on August 19 for a “SEC Settlement Offer Proposal” that could potentially resolve the ongoing regulatory scrutiny.

The proposed settlement includes several key components. First, Mango DAO would pay a civil penalty of $223,228 from its treasury, which currently holds about $2 million in USDC stablecoin and other assets.

Second, the DAO would agree to cease all offers, sales, and resales of MNGO tokens in the United States. Third, it would destroy any MNGO tokens in its possession and request their delisting from all cryptocurrency exchanges.

As of August 20, the proposal has already reached a quorum with unanimous support from voters. The voting period is set to last for several more days, allowing community members to weigh in on this significant decision.

The SEC’s investigation into Mango Markets is part of a broader probe that also involves the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC).

These investigations began shortly before the trial of Avraham Eisenberg, a trader convicted of fraud for exploiting the Mango Markets protocol in October 2022, which resulted in a loss of approximately $110 million in digital assets.

The SEC’s allegations against Mango Markets are multifaceted. The regulator claims that Mango DAO sold an unregistered security, while Mango Labs, the developer of the exchange, allegedly acted as an unlicensed broker. A related entity, Blockworks Foundation, faces similar allegations.

It’s important to note that the proposed settlement would see Mango DAO neither admit nor deny wrongdoing. This approach is common in SEC settlements and allows entities to resolve allegations without legally admitting fault.

If the settlement is accepted by both the Mango community and the SEC, it could have significant implications for the future of Mango Markets. The MNGO token serves as the platform’s primary governance token, allowing holders to vote on various aspects of the exchange’s operations.

The requirement to destroy these tokens and seek their delisting raises questions about how the platform will manage its decentralized governance moving forward.

The situation at Mango Markets highlights the ongoing regulatory challenges faced by decentralized finance (DeFi) platforms. In 2021, Mango Markets raised $70 million through a public sale of MNGO tokens, which was closed to U.S. investors in an attempt to avoid regulatory scrutiny. However, this approach did not prevent the current investigations.

The proposed settlement represents a unique approach to resolving regulatory issues in the DeFi space. If successful, it could potentially serve as a model for how other decentralized platforms might interact with regulators in the future.

As of the latest data, the MNGO token price has seen a 5.3% increase, trading at $0.015. However, this remains significantly below its all-time high of nearly $0.50 in September 2021.

The SEC has not yet formally accepted the settlement proposal. The Mango DAO representative noted that due to confidentiality rules surrounding settlement discussions and the ongoing nature of the SEC’s investigation, they are limited in the information they can share publicly.