1. Nature of the Charges
2. Terms and Implications of the Settlement
3. Context and Next Steps

On September 27, 2023, the US Securities and Exchange Commission (SEC) made headlines by charging Mango DAO and Blockworks Foundation for their involvement in the sale of unregistered crypto assets.

Nature of the Charges

The focus of the SEC's complaint was on MNGO, the governance token associated with Mango Markets. The SEC claims that the token was sold without proper registration, thereby violating US securities laws. The legal action, filed in the Southern District of New York, highlighted that Mango DAO, Blockworks Foundation, and Mango Labs acted as unregistered brokers for the decentralized finance (DeFi) platform. Since the launch of MNGO token sales in August 2021, the companies reportedly raised over $70 million from investors globally, including those based in the United States.

Terms and Implications of the Settlement

In a significant turn of events, the SEC announced that it had reached a settlement with the involved parties. As part of this agreement, Mango DAO and Blockworks Foundation will pay a combined total of $700,000 in civil penalties and adhere to injunctions that will prevent them from further soliciting the trading of MNGO tokens. Additionally, they will be required to destroy the existing MNGO tokens and request that trading platforms delist the token altogether.

Context and Next Steps

This settlement comes on the heels of heightened regulatory scrutiny following a major hack of Mango Markets in October 2022, where over $100 million in digital assets was stolen. The perpetrator, Avraham Eisenberg, was later arrested and charged for the exploit. Earlier this year, Mango Markets had set aside $250,000 in USDC to help navigate the increasing regulatory challenges it faced.

This case highlights the importance of regulatory compliance in the cryptocurrency industry and demonstrates the willingness of US regulatory bodies to take stringent actions against violations. The settlement between the SEC, Mango DAO, and Blockworks Foundation serves as a reminder of the serious consequences of failing to comply with securities laws.