- The US Securities and Exchange Commission (SEC) charged the teams behind the Solana-based DeFi platform Mango Markets—Mango DAO, Mango Labs, and the Blockworks Foundation—with securities charges following an investigation.
- The charges have been settled, with the entities collectively paying nearly $700,000 in civil penalties, agreeing to destroy their MNGO tokens, requesting the removal of MNGO tokens from trading platforms, and refraining from soliciting any trading platform to allow trading in or offering or selling MNGO.
- Mango DAO and the Blockworks Foundation were charged over the offer and sale of the MNGO tokens, while Mango Labs and the Foundation were charged for acting as an unregistered broker.
The U.S. Securities and Exchange Commission (SEC) recently charged and settled with entities behind the Solana-based decentralized finance (DeFi) platform Mango Markets over the offer and sale of MNGO tokens. This comes after a lengthy investigation by the SEC.
Details of the SEC Charges
The SEC announced on Friday that it has charged Mango DAO, Mango Labs, and the Blockworks Foundation with securities violations. The charges have already been settled, with the settlement approved by MNGO token holders via Mango DAO in August.
As part of the settlement, the entities will collectively pay nearly $700,000 in civil penalties. They have also agreed to destroy their MNGO tokens, request the removal of MNGO tokens from trading platforms, and refrain from soliciting any trading platform to allow trading in MNGO tokens.
Mango DAO and Blockworks were charged over the offer and sale of MNGO tokens. Meanwhile, Mango Labs and Blockworks were charged for acting as an unregistered broker.
SEC Comments on the Charges
Jorge G. Tenreiro, Acting Chief of the Crypto Assets and Cyber Unit, stated:
“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. Nor does engaging in intermediation of securities with the aid of automated or open source software change the nature of such activities.”
He continued: “If you engage in securities-intermediary functions, you must register or be exempt from doing so regardless of the technology employed and the type of legal entity used.”
The SEC maintains that despite the decentralized nature of DAOs, there are still entities responsible for token offerings that must comply with securities laws. The charges against Mango Markets entities reinforce this position.
Conclusion
The SEC continues to ramp up enforcement actions in the crypto space, especially around token offerings. The charges against and settlement with Mango Markets provide the latest example of the SEC cracking down on token sales it deems were unregistered securities offerings.
Entities in the crypto industry should ensure they fully understand how securities regulations apply to their activities and token models. Those deemed in violation still face scrutiny and charges from the SEC despite utilizing decentralized structures.
