SEC Charges Mango DAO Over Unregistered MNGO Token Sales, Entities Agree to $700K Fine

• The U.S. Securities and Exchange Commission (SEC) has accused Panama-based Decentralized Autonomous Organization (DAO) Mango DAO and Blockworks Foundation of raising over $70 million through unregistered MNGO token sales since August 2021.
• These entities marketed these tokens as governance assets for the Mango Markets crypto asset trading platform.
• Jorge G. Tenreiro, Acting Chief of the SEC’s Crypto Assets and Cyber Unit, emphasized that the label “DAO” does not alter the reality of the activities behind the project or whether they require registration.

Breaking news: The SEC takes action against Mango DAO and related entities, accusing them of unregistered token sales and broker activities, emphasizing the necessity of compliance with federal securities laws.

SEC Targets Unregistered Token Sales by Mango DAO and Blockworks Foundation

The SEC has alleged that Mango DAO and Blockworks Foundation have been involved in the unregistered sale of MNGO tokens, raising more than $70 million since August 2021. These tokens were purportedly sold as governance assets for Mango Markets, a crypto asset trading platform. The regulatory body contends that these actions were executed without proper registration, thus breaching federal securities laws.

Allegations of Unauthorized Broker Activities

Alongside the unregistered sale of tokens, Blockworks Foundation and Mango Labs have been accused of acting as unregistered brokers. These entities reportedly solicited users to trade securities, offered investment advice, and facilitated transactions on the Mango Markets platform without the necessary regulatory approvals. This conduct contradicts the requirements set forth under federal securities laws, which necessitate proper registration and compliance for such activities.

Implications of the SEC’s Actions and Statements

The SEC’s intervention underscores the importance of compliance with existing regulatory frameworks. Jorge G. Tenreiro emphasized that using the label “DAO” does not exempt entities from regulatory scrutiny. This stance is consistent with the SEC’s ongoing efforts to enforce federal securities laws in the crypto space, highlighting the agency’s commitment to ensuring that all market participants operate in a transparent and legally compliant manner.

Settlement and Future Outlook

In a move towards resolution, Mango DAO, Blockworks Foundation, and Mango Labs have agreed to pay nearly $700,000 in civil penalties and undertake corrective measures, including the destruction of MNGO tokens and their delisting from trading platforms. This settlement, still pending court approval, signifies the entities’ willingness to adhere to the stipulated requirements without formally admitting or denying the charges. This agreement follows closely on the heels of a similar SEC settlement with Trusttoken Inc. and Truecoin LLC over misleading statements related to TUSD.

Conclusion

This case involving Mango DAO and related entities serves as a critical reminder that decentralized frameworks and open-source software do not provide immunity from federal securities laws. The SEC’s actions firmly establish that all market participants, irrespective of their operational structure, must comply with regulatory obligations. As the crypto market continues to evolve, adherence to legal standards remains paramount to ensuring trust and stability within the ecosystem.