The SEC settled with Mango Markets and its affiliates for violating securities laws, obtaining $700,000 in penalties and barring MNGO tokens from being offered on exchanges.
The US Securities and Exchange Commission filed “settled charges” against Mango DAO and Blockworks Foundation on September 27 for offering and selling unregistered MNGO tokens. These entities have agreed to pay the regulator $700,000 as penalties, destroy MNGO tokens, and ask exchanges to delist the tokens. Furthermore, they are not permitted to market the tokens.
In a statement, the SEC mentioned, “The SEC’s complaint alleges that by skirting the SEC’s registration provisions, Mango DAO, Blockworks Foundation, and Mango Labs deprived investors of critical protections afforded by the federal securities laws.”
The parties reached the agreement without Mango DAO and Blockworks Foundation admitting to any wrongdoing. The court has yet to ratify the agreement. The issue stems from both entities raising over $70 million from investors worldwide in 2021 by offering MNGO—the governance token of Mango DAO. That violated the Securities Act, according to the SEC.
Beyond that, the SEC alleged that Mango Labs and Blockworks Foundation operated as unlicensed brokers “by actively soliciting and recruiting users of Mango Markets to trade securities; providing advice and valuations as to the merits of an investment in securities.” It further accused them of facilitating “securities transactions on the Mango Markets platform by assisting customers in opening accounts and regularly handling customer funds and securities.”
Jorge G. Tenreiro, Acting Chief of the SEC’s Crypto Assets and Cyber Unit, said, “Since the inception of our crypto enforcement program, our view has been that the label ‘DAO’ does not change the reality of who is behind a project, what activities they engage in, or whether their activities need to be registered.” He added, “If you engage in securities-intermediary functions, you must register or be exempt from doing so, regardless of the technology employed and the type of legal entity used.”
Mango DAO Members Voted to Settle With Regulators
In true DAO fashion, Mango DAO, responsible for the governance of the Solana-based Mango Markets DEX, undertook a community-wide vote to pay the SEC $223,228 in fines and destroy MNGO tokens. The community voted in favor of the proposal two days after it was introduced on August 19. Mango DAO voted for another proposal in September to pay a $500,000 settlement to the Commodities and Futures Trading Commission (CFTC) to end the suit the regulator brought.
