Mango Markets Settles SEC Charges Over Unregistered Securities, Agrees to Governance Token Destruction

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Mango Markets, the decentralized finance project, has reached a settlement with the U.S. Securities and Exchange Commission (SEC) over charges related to the sale of unregistered securities and acting as an unregistered broker. The entities involved—Mango DAO, Blockworks Foundation, and Mango Labs—did not admit or deny the allegations but agreed to pay nearly $700,000 in civil penalties. Additionally, they committed to destroying their MNGO governance tokens and requested trading platforms to remove these tokens, promising not to solicit any trading platform for MNGO trading in the future. The settlement is pending court approval.

This action is part of the SEC’s broader initiative to regulate the cryptocurrency industry, having filed cases against various projects and exchanges, including Coinbase and Binance, for facilitating trading in unregistered securities. The agency has also targeted decentralized projects; for instance, it sent a Wells notice to Uniswap Labs, indicating a potential lawsuit.

Mango Markets, described as a “purportedly decentralized autonomous organization,” alongside Panama-based Blockworks Foundation, raised over $70 million from MNGO token sales to investors globally, including in the U.S. The SEC emphasized that the designation of a project as a DAO does not exempt its operators from regulatory requirements. Jorge G. Tenreiro, acting chief of the Crypto Assets and Cyber Unit, stated, “Our view has been that the label ‘DAO’ does not change the reality of who is behind a project or whether their activities need to be registered.”

The troubles for Mango Markets are compounded by legal issues involving a trader accused of exploiting the platform’s rules to steal $110 million. This trader was convicted of fraud earlier this year in what marked the first U.S. trial involving criminal charges linked to cryptocurrency manipulation.

In August, MNGO token holders voted to approve the settlement with the SEC, even before formal charges were brought against the platform.

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