YEREVAN (CoinChapter.com) — The U.S. Securities and Exchange Commission (SEC) has finalized a settlement with Mango decentralized autonomous organization (DAO) and the Blockworks Foundation. The SEC charges stem from allegations of selling unregistered securities on the Mango Markets platform. As a resolution, both entities agreed to pay $700,000 in civil penalties and undertake significant remedial actions.
Specifically, the settlement requires the destruction of MNGO tokens and mandates both entities to request cryptocurrency exchanges to delist these tokens. Additionally, they must refrain from further marketing of the tokens.
Origins of the SEC Charges
The legal issues trace back to August 2021 when Mango DAO and the Blockworks Foundation allegedly raised over $70 million through the sale of MNGO governance tokens, involving U.S. residents. This action was found to contravene the Securities Act of 1933.
Furthermore, Mango Labs was implicated as an unregistered broker, purportedly soliciting users for the Mango platform and providing financial advice without proper authorization, thus breaching the Securities Exchange Act of 1934.
Regulatory Views on DAO and Cryptocurrency
Jorge Tenreiro, the acting chief of the SEC’s Crypto Assets and Cyber Unit, clarified the agency’s perspective on cryptocurrency regulation. He stated that using the label ‘DAO‘ does not alter the requirement for proper registration and compliance with regulatory standards. He reinforced that automation and open-source software do not modify the fundamental nature of their operations within regulatory frameworks.
SEC v. Mango Markets Complaint Document. Southern District of New York. Source: SEC
Mango Community Response, MNGO and Additional Settlements
Notably, on August 19, 2024, Mango DAO initiated a community vote to decide on settling with the SEC for $223,228 and agreed to the destruction of the MNGO tokens, which passed after two days. In addition, Mango Markets has also proposed a $500,000 settlement to the Commodity Futures Trading Commission to resolve further investigations without admitting any wrongdoing.
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