The US Securities and Exchange Commission (SEC) recently reached a settlement with Mango Markets’ decentralized autonomous organization (DAO) and the Blockworks Foundation for selling unregistered securities. This action comes after Mango Markets faced a $100 million exploit in 2022, prompting heightened regulatory scrutiny.
As part of the agreement, Mango DAO and the Blockworks Foundation agreed to pay a total of $700,000 in civil penalties, destroy their MNGO tokens, and request crypto exchanges to delist the tokens. They also committed to discontinuing the marketing of the tokens in the future. It’s important to note that the settlement does not require either party to admit or deny the SEC’s allegations and is subject to court approval. The decision to settle with the SEC was made following a community vote by Mango DAO in August.
Additionally, in a separate development, Mango Markets proposed a $500,000 settlement with the Commodity Futures Trading Commission (CFTC) to resolve the regulator’s investigation without admitting any wrongdoing.
The SEC’s complaint alleged that Mango DAO and the Blockworks Foundation violated the Securities Act of 1933 by raising over $70 million in August 2021 through the sale of MNGO governance tokens to investors, including US residents. The complaint also implicated Mango Labs as an unregistered broker, accused of soliciting users for the Mango platform and providing financial advice in violation of the Securities Exchange Act of 1934.
The SEC emphasized that the label “DAO” does not exempt any entity from securities laws, stating that the use of automated systems and open-source technology does not absolve operators of legal responsibilities. This case underscores the SEC’s ongoing efforts to apply existing securities laws to decentralized platforms in the crypto industry.
Overall, the settlement with Mango Markets reflects the regulatory landscape’s evolution as authorities seek to enforce compliance within the rapidly expanding cryptocurrency market.