Mango Markets, a decentralized autonomous organization (DAO) in the cryptocurrency space, recently settled charges with the U.S. Securities and Exchange Commission (SEC) over allegations that its MNGO token was an unregistered security. The SEC also accused Mango Labs LLC and Blockworks Foundation of offering unregistered broker services in connection with the MNGO token. As part of the settlement, the entities have agreed to destroy all MNGO tokens in circulation and have requested crypto exchanges to cease trading the tokens. Additionally, they will pay a total of $700,000 in fines, pending court approval.
Settlement Details and Background
The SEC’s press release on the settlement highlighted that Mango DAO and Blockworks Foundation raised $70 million through the sale of MNGO tokens starting in August 2021. The charges against the entities alleged that the tokens constituted unregistered securities and that the entities provided unregistered broker services. The settlement agreement includes a provision for the destruction of all MNGO tokens and a halt on trading activities involving the tokens.
Mango DAO’s Future Uncertainty
Mango DAO, which operates through a governance token system, allows members to vote on various proposals related to the project. The recent settlement with the SEC raises questions about the future of Mango DAO and its operations without the MNGO token. The project’s members will need to navigate these changes and potentially explore alternative paths forward.
SEC’s Stance on Regulation
In a statement regarding the settlement, SEC Acting Crypto and Cyber Unit Chief Jorge Tenreiro emphasized the importance of regulatory compliance for entities engaging in securities-intermediary functions. The SEC’s position is that the label of a decentralized autonomous organization does not exempt a project from regulatory scrutiny if it involves activities that fall under securities laws. Tenreiro’s comments underscore the agency’s commitment to enforcing regulations in the rapidly evolving crypto space.
Mango Markets’ Legal History
Mango Markets has faced challenges in the past, including a significant incident in which Avraham Eisenberg drained over $110 million worth of tokens from the exchange in 2022. Eisenberg was later convicted of fraud and market manipulation related to his actions at Mango Markets. Despite these setbacks, the project attempted to relaunch its decentralized trading platform last year. However, the legal issues and regulatory concerns surrounding the project have continued to impact its operations.
Future Implications for Mango Markets
The settlement with the SEC marks a significant development for Mango Markets and its affiliated entities. The decision to destroy all MNGO tokens and cease trading activities reflects a willingness to comply with regulatory requirements. Moving forward, Mango Markets will need to reassess its business model and potentially explore alternative token offerings or governance structures that align with regulatory expectations.
Conclusion
The resolution of the SEC dispute and the agreement to destroy MNGO tokens represent a turning point for Mango Markets and its associated entities. The settlement underscores the importance of regulatory compliance in the cryptocurrency space and highlights the challenges that DAOs and decentralized projects face in navigating legal requirements. As Mango Markets looks to the future, the project will need to adapt to the changing regulatory landscape while maintaining its commitment to innovation in the crypto industry.
