The U.S. Securities and Exchange Commission (SEC) has charged Mango DAO and Blockworks Foundation for illegal sales related to the MNGO tokens, marking a significant regulatory action in the cryptocurrency space.
Overview of Charges
- Unregistered Sales: The SEC alleges that Mango DAO and Blockworks Foundation conducted unregistered sales of MNGO tokens, raising over $70 million from investors since August 2021. This included sales to U.S. residents, which violated the Securities Act of 1933.
- Brokerage Violations: The entities are also accused of operating as unregistered brokers by soliciting trades, providing investment advice, and facilitating transactions on the Mango Markets platform.
SEC’s Actions
The SEC is cracking down on these kinds of actions to protect investors. According to the SEC, by avoiding the registration process, Mango DAO, Blockworks Foundation, and Mango Labs deprived investors of important protections, leaving them in the dark about potential risks.
The SEC filed the case in the U.S. District Court for the Southern District of New York. The charges against Mango DAO and Blockworks Foundation relate to violations of the Securities Act of 1933, which sets the rules for offering securities. The charges against Blockworks Foundation and Mango Labs relate to the Securities Exchange Act of 1934, which regulates brokers.
Settlement Details
- Financial Penalties: As part of the settlement, Mango DAO, Blockworks Foundation, and Mango Labs LLC will collectively pay approximately $700,000 in civil penalties. They have agreed to destroy all remaining MNGO tokens and request their removal from trading platforms.
- Court Approval: The settlement is subject to approval by the court, and the organizations involved neither admitted nor denied the allegations.
Implications
The SEC’s action underscores its commitment to regulating cryptocurrency activities that resemble traditional securities trading. This case highlights the ongoing scrutiny of decentralized organizations and emphasizes that operational structures do not exempt entities from regulatory compliance
