The United States Securities and Exchange Commission (SEC) filed “settled charges” against the Mango decentralized autonomous organization (DAO) and the Blockworks Foundation on September 27, alleging that both entities sold unregistered Securities. 

As part of the settlement agreement, the entities have collectively agreed to pay the SEC $700,000 in civil penalties, destroy their Mango tokens, petition exchanges to delist the tokens and refrain from marketing the tokens to exchanges in the future. 

The SEC noted that the settlement was reached without any party admitting or denying wrongdoing and is still subject to court approval. 

SEC complaint against Mango DAO, Mango Labs, and Blockworks Foundation. Source: SEC.

According to the SEC complaint, in August 2021, Mango DAO and the Blockworks Foundation allegedly violated the Securities Act of 1933 by raising more than $70 million from selling Mango (MNGO) governance tokens to investors — including residents of the United States. 

Mango Labs was also named in the SEC complaint as an alleged unregistered broker. The SEC claims that the firm violated the Securities Exchange Act of 1934 by allegedly soliciting users for the Mango platform and providing financial advice. Jorge G. Tenreiro, acting chief of the crypto assets and cyber unit issued this statement alongside the complaint: 

“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.” 

Tenreiro added that the use of automated processes and open-source software does not “Change the nature of such activities.” 

Mango DAO puts the SEC fine to a vote

On Aug. 19, 2024, the Mango DAO initiated a community vote to propose settling with the SEC for $223,228 and destroying the Mango tokens, which passed after 2 days of voting. 

More recently, in Sept. 2024, Mango Markets proposed offering the Commodities Futures Trading Commission (CFTC) a $500,000 settlement to end the investigation against the platform. This proposed settlement likewise featured no admission of wrongdoing.

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