Mango DAO, Mango Labs LLC, and Blockworks Foundation have agreed to a settlement with the US Securities and Exchange Commission (SEC) over claims that they offered unregistered brokerage services and that their MNGO token operated as an unregistered security.
As part of the settlement, they must destroy the MNGO tokens, request that crypto exchanges halt trading them, and pay a $700,000 fine; however, the settlement still awaits court approval, according to the SEC's announcement on September 27.
This follows a community vote by Mango DAO a month ago, where members decided to accept the agreement.
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Mango DAO uses the MNGO token for its governance, raising concerns about how the project will operate after the token is destroyed.
The SEC noted that Mango DAO and Blockworks Foundation raised $70 million from selling MNGO tokens starting in August 2021. However, Mango DAO, Mango Labs, and Blockworks Foundation neither admit nor deny these allegations.
Jorge Tenreiro, the SEC's Acting Chief of the Crypto and Cyber Unit, noted:
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.
Mango Markets has been facing challenges since a major exploit in 2022 when the platform lost over $110 million. In April this year, Avraham Eisenberg, the person behind this exploit, was found guilty of wire fraud, commodities fraud, and commodities manipulation. He is awaiting his sentencing, which has been delayed until December.
