In a significant move for the cryptocurrency sector, Mango DAO, Mango Labs LLC, and Blockworks Foundation have reached a settlement with the U.S. Securities and Exchange Commission (SEC) concerning the unregistered sale of MNGO tokens. This decision comes in light of allegations that these entities were involved in offering unregistered security, as well as functioning as unregistered brokers.
Today we filed settled charges against Mango DAO and Blockworks Foundation for engaging in the unregistered offer and sale of crypto assets called “MNGO” tokens. https://t.co/UvS5QiAU7Xpic.twitter.com/KF9F5urZ11
As part of the settlement, the involved parties have agreed to destroy all MNGO tokens and request that cryptocurrency exchanges cease trading these tokens. Additionally, they will pay a total of $700,000 in civil penalties, pending court approval. The SEC’s announcement highlights the sale of MNGO tokens, which reportedly raised over $70 million since their launch in August 2021.
Jorge G. Tenreiro, the Acting Chief of the SEC’sCrypto Assets and Cyber Unit, underscored the importance of registration, stating, “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.”
Implications for the Future
The SEC’s complaint pointed out that Mango DAO and Blockworks Foundation had operated as unregistered brokers, soliciting users and facilitating transactions without the necessary legal registration. This regulatory action underscores the SEC’s commitment to enforcing compliance within the burgeoning cryptocurrency market.
Reflecting on the situation, Tenreiro stated, “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.” This perspective challenges the notion that decentralised autonomous organisations (DAOs) can evade regulatory scrutiny simply by their classification.
Historical Context
The settlement arrives on the heels of a tumultuous period for Mango Markets, which has struggled to recover since a high-profile incident in 2022, when Avraham Eisenberg exploited the platform, leading to a loss of approximately $110 million in tokens. Eisenberg was subsequently convicted of fraud and market manipulation related to his actions, with sentencing scheduled for December 12.
Additionally, the Mango DAO community recently voted on a proposal to accept the SEC’s settlement offer. This vote passed unanimously, indicating a collective desire to resolve the ongoing legal challenges.
Conclusion
The SEC’s settlement with Mango DAO and its affiliates marks a critical moment in the evolving landscape of cryptocurrency regulation. As the SEC continues to enforce compliance measures, it raises important questions about the future of governance tokens and the operations of decentralized platforms. The outcome of this case may set important precedents for similar entities navigating the regulatory environment.
