Mango DAO has finalized a settlement with the U.S. Securities and Exchange Commission (SEC), agreeing to pay a fine of $700,000 and destroy its MNGO tokens. This resolution comes amid allegations that the MNGO token constituted an unregistered security and that the involved entities provided unregistered brokerage services.
Key Details of the Settlement
- Entities Involved: The settlement involves Mango DAO, Mango Labs LLC, and Blockworks Foundation. Notably, these organizations did not admit or deny the SEC’s allegations but agreed to comply with the settlement terms.
- Token Destruction: As part of the agreement, Mango DAO will destroy all MNGO tokens and request cryptocurrency exchanges to halt trading of these tokens. This move aims to eliminate any further trading activities related to MNGO.
- Background of Allegations: The SEC’s charges stem from claims that Mango DAO raised over $70 million through the sale of MNGO tokens starting in August 2021, without adhering to necessary registration requirements. The SEC emphasized that regardless of the project’s decentralized nature, all entities involved must comply with securities laws.
- Previous Challenges: This settlement follows a tumultuous period for Mango Markets, including a significant exploit in 2022 where over $110 million was siphoned off by Avraham Eisenberg. His actions led to a broader investigation into Mango Markets and its operations, culminating in this regulatory scrutiny.
Implications for the Future
The decision to destroy the MNGO tokens raises questions about the operational future of Mango Markets. The governance structure, which relied heavily on MNGO token holders for decision-making, may face significant challenges without this key asset. The SEC’s Acting Chief of the Crypto and Cyber Unit reiterated that using decentralized structures does not exempt entities from regulatory obligations.This case highlights the increasing regulatory scrutiny faced by decentralized finance (DeFi) projects, as regulators seek to ensure investor protections are upheld within this rapidly evolving sector. As Mango DAO navigates this settlement, it sets a precedent for how other DeFi protocols might interact with regulatory bodies moving forward.In conclusion, while the settlement marks a resolution to current allegations, it also underscores the need for crypto projects to align closely with regulatory frameworks to avoid similar pitfalls in the future
