The U.S. Securities and Exchange Commission (SEC) recently reached a settlement with Mango DAO, Mango Labs LLC, and Blockworks Foundation, alleging that the MNGO token was an unregistered security and that the entities offered unregistered broker services. This settlement requires the entities to destroy their MNGO tokens, cease trading activities on crypto exchanges, and pay a total of $700,000. The settlement is still pending court approval, as announced by the SEC in a press release on Friday.
Mango DAO held a vote on whether to accept the settlement offer proposal, which was ultimately approved by the members. The DAO also voted on a settlement proposal with the Commodity Futures Trading Commission (CFTC), which passed unanimously. The future of Mango DAO remains uncertain without the MNGO token, as it is used for governance within the project.
According to the SEC, Mango DAO and Blockworks Foundation collectively sold $70 million worth of MNGO tokens starting in August 2021. As part of the settlement, the entities are neither admitting nor denying the charges brought against them.
In a statement, SEC Acting Crypto and Cyber Unit Chief Jorge Tenreiro emphasized the importance of entities offering securities-intermediary functions to register with the SEC. He stated that the label ‘DAO’ does not exempt projects from regulatory requirements, regardless of the use of automated or open-source software.
Mango Markets, a decentralized trading venue associated with Mango DAO, has faced challenges following a significant token drain by Avraham Eisenberg in 2022. Eisenberg was convicted of fraud and market manipulation related to the incident earlier this year, with his sentencing postponed to December 12, 2024.
The settlement with the SEC serves as a reminder of the regulatory scrutiny facing cryptocurrency projects and the importance of compliance with securities laws. It is essential for entities engaging in token offerings and trading activities to be aware of regulatory requirements and take necessary steps to ensure compliance to avoid legal repercussions.