Mango Markets, the once-dominant decentralized exchange on the Solana blockchain, is poised to resolve its legal challenges with the U.S. Securities and Exchange Commission (SEC) following allegations of securities law violations. The exchange, which was severely impacted by fraudster Avraham Eisenberg’s scheme, is now preparing to settle claims brought against it.
On Monday, Mango DAO, the organization overseeing Mango Markets, initiated a vote on a proposed settlement offer from the SEC. The settlement could involve substantial fines, the destruction of its MNGO token holdings, and a request for delisting from other trading platforms. While the SEC has not yet accepted the proposal, the vote is expected to pass, given it has sufficient support.
The potential settlement raises concerns about the future of Mango Markets, particularly regarding the role of the MNGO governance token. This token is crucial for voting on various aspects of the exchange’s operations, including token listings and financial decisions. If the token becomes obsolete, it could severely impact the platform’s functionality.
Mango Markets has been reeling from the aftermath of Eisenberg’s “highly profitable trading strategy,” which in October 2022 siphoned $110 million from the protocol and led to Eisenberg’s criminal trial for fraud and manipulation within the decentralized finance (DeFi) sector.
The ongoing regulatory scrutiny extends beyond the SEC. Mango Markets is also under investigation by the Department of Justice and the Commodity Futures Trading Commission. However, the current settlement proposal specifically addresses the SEC’s charges, which include allegations of selling unregistered securities and operating as an unlicensed broker. The proposal suggests a fine of $223,228, while Mango DAO’s treasury holds nearly $2 million in USDC and other assets.
The SEC declined to comment on the matter. During the 2021 bull run, Mango Markets gained attention by raising $70 million through the sale of MNGO tokens, strategically excluding U.S. investors to avoid regulatory complications, as reported by CoinDesk.
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