Mango DAO and Blockworks Foundation Settle SEC Charges, Agree to Delist MNGO
Mango DAO and Blockworks Foundation have reached a settlement with the US Securities and Exchange Commission (SEC) following charges related to the sale of unregistered securities. The settlement requires the two entities to pay a total of $700,000 in civil penalties and cease all activities related to the MNGO token.
Background and Charges
The SEC’s investigation into Mango Markets’ decentralized autonomous organization (DAO) and the Blockworks Foundation stemmed from an exploit in 2022 that led to heightened regulatory scrutiny. The watchdog alleged that Mango DAO and Blockworks Foundation had sold unregistered securities, specifically the MNGO governance tokens, raising over $70 million in August 2021, including from US residents.
In addition to the civil penalties, Mango DAO and Blockworks Foundation have agreed to destroy all MNGO tokens and request that crypto exchanges delist the tokens. Both entities will also cease marketing the tokens in the future as part of the settlement terms.
It is important to note that the settlement does not require Mango DAO or Blockworks Foundation to admit or deny the SEC’s allegations. The agreement is pending court approval and comes after Mango DAO’s community vote in August to settle with the SEC.
Regulatory Environment
The SEC’s stance on decentralized platforms like Mango DAO highlights the ongoing efforts to bring such entities under the purview of existing securities laws. The agency maintains that the label of a decentralized autonomous organization does not exempt any entity from complying with securities regulations.
The use of automated systems and open-source technology does not absolve operators of decentralized platforms from their legal responsibilities. As such, regulators are increasingly scrutinizing the activities of DAOs and similar entities in the crypto industry.
Settlements and Compliance
In addition to the settlement with the SEC, Mango Markets proposed a separate $500,000 settlement with the Commodity Futures Trading Commission (CFTC) to end the regulator’s investigation. The agreements with both the SEC and CFTC do not involve admitting any wrongdoing on the part of Mango DAO, Blockworks Foundation, or Mango Labs.
Mango Labs, a related entity named in the SEC’s complaint, was accused of acting as an unregistered broker by soliciting users for the Mango platform and providing financial advice. The SEC’s actions against Mango Markets serve as a reminder of the importance of compliance with securities laws, even in the rapidly evolving landscape of decentralized finance.
Community Impact
The delisting of the MNGO tokens and the cessation of all related activities by Mango DAO and Blockworks Foundation will have significant implications for the community. Investors and users of the Mango platform will need to adjust to the changes resulting from the settlement with regulators.
The regulatory actions taken against Mango Markets may also prompt other decentralized platforms to reassess their compliance measures and ensure that they are operating within the bounds of securities laws. The enforcement actions by the SEC and CFTC underscore the need for transparency and regulatory adherence in the crypto industry.
Moving Forward
As the crypto industry continues to evolve, regulatory bodies like the SEC and CFTC are actively monitoring and enforcing compliance with securities laws. Decentralized platforms and DAOs must navigate the complex regulatory landscape to avoid running afoul of the law.
The settlements reached by Mango DAO and Blockworks Foundation serve as a cautionary tale for other entities in the crypto space. Compliance with securities regulations is paramount to maintaining the integrity of the industry and protecting investors from potential risks.
Conclusion
In conclusion, the settlement between Mango DAO, Blockworks Foundation, and the SEC underscores the importance of regulatory compliance in the crypto industry. The delisting of the MNGO tokens and the payment of civil penalties serve as a reminder that all entities, including decentralized platforms, must adhere to securities laws to operate lawfully.
The actions taken by regulators against Mango Markets highlight the need for transparency, accountability, and adherence to regulatory standards in the rapidly evolving world of decentralized finance. As the regulatory landscape continues to evolve, it is crucial for entities in the crypto space to prioritize compliance to ensure the long-term sustainability and legitimacy of the industry.
