SEC Reaches Settlement with Mango Markets Over MNGO Token Sales

• The SEC has resolved its case with Mango Markets concerning the sale of unregistered tokens during a $70 million crypto offering.
• Both Mango DAO and Blockworks Foundation will incur a combined civil penalty of $700,000.
• As part of the settlement, Mango Markets will be required to annihilate the MNGO tokens and seek to have them delisted by exchanges.

On September 27, the US Securities and Exchange Commission reported that it charged Mango DAO and Blockworks Foundation for the distribution and sale of unregistered cryptocurrency assets.

The SEC’s allegations concern the sale of MNGO, which serves as the governance token for Mango Markets. Additionally, the platforms acted as unregistered brokers for the DeFi service.

In its lawsuit filed with the US District Court for the Southern District of New York, the SEC claims that the three parties violated US securities laws alongside broker registration requirements.

The SEC states that Mango DAO and Blockworks Foundation, a Panama-registered entity, raised over $70 million through the sale of MNGO tokens. These sales began in August 2021 and were available to global investors, including those in the US.

The SEC has reached a settlement with the involved parties, who have agreed to comply with legal injunctions and pay a total of $700,000 in civil fines.

Destruction of MNGO tokens

Under the terms of the settlement, Mango DAO, Mango Labs, and Blockworks Foundation will destroy the MNGO tokens, and they will also request that trading platforms delist MNGO while refraining from soliciting exchanges to allow trading of MNGO tokens.

These legal injunctions and penalties will come into effect after receiving court approval.

The Mango Markets incident

Earlier this year, Mango Markets set aside $250,000 in USDC to manage the increasing regulatory scrutiny faced by the platform. This followed a significant exploit in October 2022 that resulted in the theft of over $100 million in digital assets.

The perpetrator, Avraham Eisenberg, was subsequently arrested and charged for the exploit.

However, the exploit has drawn regulatory attention to Mango Markets, culminating in the recent SEC charges and settlement. Mango Markets proposed a settlement agreement with the SEC in August.