Mango Markets DAO has proposed a $223,228 settlement with the SEC to address allegations of securities law violations, marking a significant move amid ongoing regulatory scrutiny.
Settlement Proposal Amid Regulatory Scrutiny
Mango Markets DAO, the decentralized autonomous organization behind the Solana-based decentralized exchange Mango Markets, has proposed a settlement with the U.S. Securities and Exchange Commission (SEC) to address allegations of securities law violations. The proposal, which includes a $223,228 fine, follows extensive investigations by U.S. regulators into the activities of the platform and its affiliates.
Background: Regulatory Challenges and Legal Battles
Mango Markets was significantly impacted by a $110 million exploit carried out by Avraham Eisenberg in October 2022. Eisenberg was later charged with fraud and market manipulation, which led to heightened scrutiny from several regulatory bodies, including the SEC, the Department of Justice (DOJ), and the Commodity Futures Trading Commission (CFTC). The exploit and subsequent legal challenges have contributed to the platform's ongoing difficulties.
SEC’s Accusation of Securities Violation
The SEC's allegations against Mango DAO primarily focus on violations of Sections 5(a) and 5(c) of the Securities Act of 1933. Additionally, Mango Labs and the Blockworks Foundation, entities associated with Mango Markets, have been accused of violating Section 15(a) of the Securities Exchange Act of 1934. The proposed settlement aims to resolve these issues without the DAO admitting or denying any wrongdoing.
Key Terms of Settlement Proposal
Under the terms of the proposed settlement, Mango DAO would agree to the following actions:
- Payment of a $223,228 civil penalty to the SEC, drawn from the DAO's treasury, which currently holds nearly $2 million in USDC and other assets.
- Permanent cessation of all offers, sales, or resales of MNGO tokens within the United States.
- Destruction or removal of all MNGO tokens in the DAO's possession or control within ten days of the settlement's finalization.
- Requesting the removal of MNGO tokens from all trading platforms and refraining from soliciting exchanges for MNGO trading.
The settlement proposal was opened for voting by the DAO on Monday and has already garnered sufficient support to pass. However, the SEC has yet to formally accept the offer.
Implications for Mango Markets
If the SEC accepts the proposed settlement, it could mark a significant turning point for Mango Markets. Once a prominent player in the decentralized exchange space, the platform would face severe restrictions on its operations. The mandatory cessation of MNGO token activities and the removal of the token from exchanges would likely lead to a decline in the platform's influence and user base.
The outcome of this settlement could also set a precedent for how regulators treat other decentralized platforms, particularly in cases involving alleged securities law violations.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
