On September 27, 2023, the US Securities and Exchange Commission (SEC) made headlines by charging Mango DAO and the Blockworks Foundation for their involvement in the sale of unregistered crypto assets.
The focus of the SEC’s complaint was on MNGO, the governance token associated with Mango Markets, which the SEC claims was sold without proper registration, thereby violating US securities laws.
The SEC’s legal action, filed in the Southern District of New York, highlighted that the two entities, along with Mango Labs, acted as unregistered brokers for the decentralized finance (DeFi) platform. Since the launch of MNGO token sales in August 2021, the companies reportedly raised over $70 million from investors globally, including those based in the United States.
In a significant turn of events, the SEC announced that it had reached a settlement with the involved parties. As part of this agreement, Mango DAO and Blockworks Foundation will pay a combined total of $700,000 in civil penalties and adhere to injunctions that will prevent them from further soliciting the trading of MNGO tokens.
Additionally, they will be required to destroy the existing MNGO tokens and request that trading platforms delist the token altogether.
This settlement comes on the heels of heightened regulatory scrutiny following a major hack of Mango Markets in October 2022, where over $100 million in digital assets was stolen.
The perpetrator, Avraham Eisenberg, was later arrested and charged for the exploit. Earlier this year, Mango Markets had set aside $250,000 in USDC to help navigate the increasing regulatory challenges it faced.
