Solana’s Former Top Decentralized Crypto Exchange Faces SEC Securities Violations

On Monday, the organization responsible for Mango Markets, known as Mango DAO, initiated voting on a proposition regarding an offer to settle with the Securities and Exchange Commission (SEC). If approved, this settlement would require the group to pay substantial fines in the hundreds of thousands of dollars, dispose of their MNGO tokens, and request delisting from other trading platforms.

The Securities and Exchange Commission (SEC) hasn’t endorsed the proposition as of now. However, should this vote succeed – which appears likely given the number of votes already secured – and if the SEC decides to approve it, the future prospects of Mango Markets could turn rather unpredictable.

As an analyst, I pondered over the potential impact on Mango Markets’ operational structure should the MNGO governance token, which serves as a crucial tool for investors in deciding matters ranging from token listings and buybacks to debt repayments, among other things, including SEC settlements, cease to be functional. The question was, how would these day-to-day functions continue without this essential instrument?

Mango Markets, a DeFi platform, has been grappling with recovery since the damaging impact of Avraham Eisenberg’s strategic trading, which in October 2022 resulted in a loss of $110 million from the protocol. This strategic trading led to Eisenberg’s historic criminal trial for fraud and manipulation in the decentralized finance sector.

Prior to the recent trial, CoinDesk disclosed that Mango Markets was under “regulatory scrutiny.” The details of this investigation emerged during the broadcast on Monday. Besides the Securities and Exchange Commission (SEC), Mango Markets is also being investigated by the Department of Justice (DoJ) and the Commodity Futures Trading Commission (CFTC). As an analyst, I find myself closely monitoring these developments.

In the proposed settlement offer on Monday, the focus is solely on the SEC’s investigation concerning Mango DAO and its alleged sale of an unregistered security. Additionally, Mango Labs, creators of Mango Markets, are accused of functioning as an unlicensed broker. Furthermore, Blockworks Foundation, a separate entity not connected to the media group, is also facing similar regulatory charges.

The suggested resolution involves Mango DAO neither admitting nor conceding any misconduct. It proposes a penalty amounting to $223,228. At present, the DAO’s financial reserves are close to $2 million in USDC and diverse assets whose immediate practical worth was not evident.

The SEC did not respond to a request for comment.

In the heat of Solana’s sizzling summer rally of 2021, Mango Markets garnered attention with a public sale of $70 million worth of MNGO tokens, a move I personally found quite intriguing as a crypto investor.

According to a previous report by CoinDesk, the sale might have been restricted to non-US investors as a strategy to avoid potential future regulatory complications that could potentially hinder similar ventures for extended periods.