Mango Markets Settles Charges with SEC for $700K Over Unregistered Token Sale

Key Takeaways

•  The settlement includes the destruction of all MNGO tokens, a request for crypto exchanges to halt trading the token, and a combined $700,000 fine. 
•  SEC charged Mango Markets with conducting unregistered sales of MNGO, which the agency classified as a security.

On Friday, the U.S. Securities and Exchange Commission (SEC) charged Mango Markets with conducting unregistered sales of its digital token, MNGO, which the watchdog classified as a security.

The charges also extended to Mango DAO, Mango Labs LLC, and Blockworks Foundation for failing to register their activities, which involved offering broker services without the necessary approvals.

The SEC alleged that Mango DAO, a decentralized autonomous organization, along with Panama-based Blockworks Foundation, raised over $70 million through the sale of MNGO tokens beginning in August 2021. According to the SEC, these entities bypassed critical investor protections by not registering the tokens, as required under federal securities laws.

“These entities raised millions from investors without adhering to essential safeguards,” the SEC stated

To resolve the charges, all involved parties agreed to a settlement that includes the destruction of all MNGO tokens, a request for cryptocurrency exchanges to halt trading the token, and a combined $700,000 fine. The settlement, while agreed upon, is still pending court approval.

This follows an open vote by Mango DAO last month on whether to accept the SEC’s settlement proposal. In parallel, the decentralized organization had already passed a unanimous vote earlier this week on a similar settlement proposal with the Commodity Futures Trading Commission (CFTC).

Mango Markets faces charges from the CFTC for allegedly failing to register as a commodities exchange, failing to implement Know Your Customer (KYC) measures and for illegally offering services to customers in the US.

The SEC has earlier charged Avraham “Avi” Eisenberg, the individual behind the exploit, with orchestrating an attack by manipulating the price of MNGO tokens. Eisenberg’s legal team has maintained that his actions were part of a “winning and legal trading strategy,” but he was nonetheless found guilty of commodities fraud, commodities manipulation, and wire fraud earlier this year by Jurors in federal court in Manhattan