The U.S. Securities and Exchange Commission (SEC) settled charges with Mango DAO, Mango Labs LLC and Blockworks Foundation alleging that the MNGO token was an unregistered security and that the latter entities offered unregistered broker services.
The entities will destroy their MNGO tokens and ask crypto exchanges to stop trading the tokens, as well as pay $700,000 total as part of the settlement, which is still subject to a court’s approval, the SEC announced Friday in a press release. The settlement comes just over a month after Mango DAO held an open vote on whether it should adopt the settlement offer proposal. The DAO voted on a settlement proposal with the Commodity Futures Trading Commission (CFTC) earlier this week as well, which passed unanimously.
Mango DAO members vote on proposals through the MNGO governance token. It’s unclear what the project’s future will look like without the token.
The SEC’s press release noted that Mango DAO and Blockworks Foundation (no relation to the news and events business) sold $70 million worth of MNGO tokens starting in August 2021.
As part of the settlement, Mango DAO, Blockworks Foundation and Mango Labs are neither admitting nor denying the charges.
In a statement, SEC Acting Crypto and Cyber Unit Chief Jorge Tenreiro said any entity that offers “securities-intermediary functions” needs to register or otherwise be exempt from registration with the SEC.
“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. Nor does engaging in intermediation of securities with the aid of automated or open source software change the nature of such activities,” he said in the statement.
Last year, Mango Markets – which has struggled to recover since Avraham Eisenberg drained more than $110 million worth of tokens from the exchange in 2022 – tried relaunching the decentralized trading venue. Eisenberg was convicted of fraud and market manipulation tied to his actions around Mango earlier this year, though his sentencing has been pushed to Dec. 12.
