The US Securities and Exchange Commission announced Friday a settlement with the companies behind Mango Markets, a DeFi protocol on Solana.
In the settled charges, the SEC alleged that the MNGO governance tokens for Mango DAO, the digital cooperative that controls the trading protocol, were unregistered securities.
It said that Mango DAO and Blockworks Foundation, an associated nonprofit, had therefore issued and sold unregistered securities when they sold the tokens.
The agency also alleged that Blockworks Foundation as well as Mango Labs, one of the developers behind Mango Markets, acted as unregistered brokers of various cryptocurrencies sold through the DeFi protocol.
These cryptocurrencies included Solana, said the filed complaint.
Mango DAO, Blockworks Foundation, and Mango Labs agreed to pay a fine of $700,000 without admitting or denying the allegations from the SEC. The three companies have also agreed to destroy their MNGO tokens.
“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,” Jorge Tenreiro, acting chief of the SEC’s Crypto Assets and Cyber Unit, said in a statement.
The head of growth at Mango Markets did not immediately reply to a request for comment.
Eisenberg exploit
The settlement follows a proposal passed in August from Mango DAO in which members agreed to destroy their MNGO tokens and pay a fine to the SEC.
It also comes on the heels of the successful prosecution of Avraham Eisenberg, a crypto trader who exploited the Mango Markets protocol to the tune of $110 million in October 2022.
In April, Eisenberg was convicted of fraud. He is still awaiting sentencing.
His trial put to test the legal theory that, in the wild west of DeFi, Eisenberg’s exploit of Mango Markets was merely a successful trading strategy.
A jury, however, said that Eisenberg’s $110 million attack was, in fact, old-fashioned market manipulation.
Shortly after Eisenberg’s October 2022 exploit, the total value of crypto deposited on Mango Markets dropped to zero, according to data from DefiLlama.
In September, developers affiliated with Mango Markets announced the launch of Fill City, a new trading protocol on Solana.
Ben Weiss is a Dubai Correspondent at DL News. Got a tip? Email him at bweiss@dlnews.com.
