Mango Markets Reaches Settlement with SEC Over Unregistered Securities Charges
This is a message being sent to decentralized finance (DeFi) world, Mango Markets, along with associated entities Mango DAO, Blockworks Foundation, and Mango Labs, has agreed to settle charges brought by the U.S. Securities and Exchange Commission (SEC). The SEC accused these entities of selling unregistered securities and operating as brokers without proper registration.
While the entities did not admit to or deny the charges, they have agreed to pay nearly $700,000 in civil penalties. As part of the settlement, Mango DAO will destroy its MNGO governance tokens, request trading platforms to remove the tokens, and commit to refraining from soliciting any trading platform to list MNGO in the future. The settlement is still pending court approval.
The SEC’s acting chief of the Crypto Assets and Cyber Unit, Jorge G. Tenreiro, emphasized that the label “DAO” (Decentralized Autonomous Organization) does not absolve entities from the need to comply with securities laws. Tenreiro stated, “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 case is just one in a series of recent actions taken by the SEC against crypto projects and exchanges. The agency has been actively pursuing cases involving decentralized projects, with high-profile examples including Coinbase and Binance, and has even issued a Wells notice to Uniswap Labs, signaling potential legal action against the decentralized exchange.
Mango DAO’s troubles began in August 2021, when it and the Panama-based Blockworks Foundation raised over $70 million from MNGO token sales. The platform, which was designed as a decentralized exchange for margin trading on the Solana blockchain, became embroiled in controversy after a trader was convicted in April for exploiting Mango’s system to steal $110 million. This was the first U.S. trial involving criminal charges tied to cryptocurrency manipulation.
As the SEC continues to crack down on decentralized projects issuing security like tokens, this settlement sends a clear message that regulatory compliance is mandatory in the crypto space, regardless of the decentralized nature of the entities involved. The fate of Mango Markets and its MNGO token is a stark reminder to other DeFi platforms that legal scrutiny is growing.
The Road Ahead
With the regulatory landscape tightening, Mango Markets’ settlement adds to the growing tension between DeFi projects and U.S. authorities. As the SEC works to apply traditional securities laws to the emerging world of decentralized finance, crypto projects must adapt quickly or face similar legal challenges.
The settlement is yet another milestone in the SEC’s aggressive campaign to bring greater regulatory oversight to the cryptocurrency sector. It remains to be seen how this will shape the future of decentralized exchanges and DAOs in the broader context of cryptocurrency regulation.
Digital Assets Desk
