Originally published on: September 27, 2024
The SEC recently made headlines by filing “settled charges” against the operators of Mango Markets, a decentralized autonomous organization (DAO), and the Blockworks Foundation. The charges claim that both entities sold unregistered securities, leading to a civil penalty of $700,000.
As part of the settlement agreement, the entities have agreed to pay the SEC fines, destroy their MNGO tokens, and have them delisted from exchanges. Additionally, they are banned from marketing the tokens to exchanges in the future. It’s important to note that neither party admitted nor denied any wrongdoing in the settlement, which still awaits court approval.
The SEC’s complaint alleges that in August 2021, Mango DAO and the Blockworks Foundation violated the Securities Act of 1933 by raising over $70 million through the sale of MNGO governance tokens, some of which were sold to U.S. residents. Mango Labs was also implicated in the complaint as an unregistered broker for soliciting users and providing financial advice.
Jorge Tenreiro, acting chief of the Crypto Assets and Cyber Unit at the SEC, emphasized that the use of automated processes and open-source software does not exempt entities from regulatory scrutiny. The complaint highlights the SEC’s continued efforts to enforce securities laws in the rapidly evolving crypto market.
In response to the charges, Mango DAO held a community vote in August 2024 to settle with the SEC for a significant sum, which was ultimately approved. Additionally, Mango Markets is considering a settlement offer with the Commodity Futures Trading Commission to resolve another investigation.
The legal battle between regulators and crypto platforms like Mango Markets showcases the ongoing challenges in enforcing financial regulations in the digital asset space. Stay tuned as this story unfolds.
