• Mango Markets, a DeFi platform, has agreed to settle with the SEC despite no formal charges.

  • The SEC has been investigating Mango Markets for offering unregistered securities (the MNGO token).

  • Mango DAO members opt for settlement to avoid a costly legal dispute with the SEC, which would involve a $223,228 penalty if approved.

Mango Markets, a DeFi platform, has reached a settlement with the U.S. Securities and Exchange Commission (SEC), even though the SEC has not officially accused them of any wrongdoing. This development follows a trader’s theft of $110 million from Mango Markets using the MNGO token.

Back in April of last year, a trader named Avraham Eisenberg was accused of manipulating the MNGO token to steal $110 million from Mango Markets. This was the first US criminal case involving crypto manipulation The SEC investigated Mango Markets for potentially offering unregistered securities (the MNGO token). However, they have yet to charge the platform formally.

Still, Mango DAO members voted in favor of a settlement with the SEC. The settlement requires the DeFi platform to pay a $223,228 civil penalty, stop all trading of MNGO tokens in the US market, and get rid of any MNGO tokens owned by the DAO. If approved, the settlement would resolve the SEC’s claims and as part of the settlement offer, the DAO would not be admitting or denying the SEC’s allegations. 

Mango Market’s decision to settle with the SEC without any formal charges might be a strategic move to avoid a potentially expensive legal battle. Considering the regulator’s history of targeting prominent decentralized projects like Uniswap Labs and BarnBridge DAO, along with its recent actions against major exchanges like Binance and Kraken, a drawn-out legal battle would be both costly and time-consuming. In this situation, settling might be a quicker and more affordable option.

Because the outcome of a legal battle with the SEC is uncertain, settling offers some closure. Furthermore, this could set a precedent for how the agency regulates DeFi platforms. Settling might be seen as a way to avoid further scrutiny from the SEC.

For now, the future of the MNGO token in the US is up in the air, as the DAO has agreed to stop selling it. This case highlights the ongoing tension between DeFi platforms and regulatory agencies like the SEC.

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