The US Securities and Exchange Commission (SEC) settled charges against Mango Markets' decentralized autonomous organization (DAO) and the Blockworks Foundation on Sept. 27.
The watchdog had accused both entities of selling unregistered securities following Mango Markets' $100 million exploit in 2022, which brought the platform under heightened regulatory scrutiny.
Under the terms of the settlement, Mango DAO and the Blockworks Foundation agreed to pay a total of $700,000 in civil penalties, destroy their MNGO tokens, and ask crypto exchanges to delist the tokens. Additionally, both entities will cease marketing the tokens in the future.
The settlement does not require either party to admit or deny the SEC's allegations and is pending court approval. It comes after Mango DAO passed a community vote to settle with the SEC in August.
Additionally, a month later, in September, Mango Markets proposed a separate $500,000 settlement with the Commodity Futures Trading Commission (CFTC) to end the regulator's investigation, again without admitting any wrongdoing.
Charges
The SEC's complaint alleged that Mango DAO and the Blockworks Foundation violated the Securities Act of 1933 by raising over $70 million in August 2021 through the sale of MNGO governance tokens to investors, including US residents.
Mango Labs was also named in the complaint as an unregistered broker, with the SEC accusing the firm of soliciting users for the Mango platform and providing financial advice in violation of the Securities Exchange Act of 1934.
According to the SEC statement:
“We have maintained that the label ‘DAO' does not exempt any entity from securities laws.”
The regulator added that the use of automated systems and open-source technology does not alter the legal responsibilities of those operating such projects.
The Mango Markets case highlights ongoing regulatory efforts to bring decentralized platforms under the purview of existing securities laws as the SEC continues to increase enforcement in the crypto industry.