Mango Markets, Solana’s once-prominent decentralized crypto exchange, is preparing to settle with the U.S. Securities and Exchange Commission (SEC) over allegations that it violated numerous securities laws.
The governing body behind Mango Markets, Mango DAO, launched a vote on Monday for a “SEC settlement offer proposal” that would see the group pay hundreds of thousands of dollars in fines, destroy its MNGO tokens, and seek their delisting from other trading platforms.
While the SEC has not yet accepted the proposal, the vote already has enough support to pass. If the agency agrees to the settlement, Mango Markets’ future could be highly uncertain. The obsolescence of the MNGO governance token, which investors use for voting on key matters such as token listings, buybacks, and debt repayments, raises questions about the platform’s ability to function.
Mango Markets has struggled to recover from the damage inflicted by opportunistic trader Avraham Eisenberg’s “highly profitable trading strategy” in October 2022, which drained the protocol of $110 million.
Before Eisenberg’s fraud and manipulation trial, Mango Markets faced a “regulatory inquiry.” In addition to the SEC, Mango Markets is under investigation by the Department of Justice and the Commodity Futures Trading Commission.
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However, the current settlement proposal only addresses the SEC’s investigation, which alleges that Mango DAO sold an unregistered security and that Mango Labs, the developer of Mango Markets, acted as an unlicensed broker. A related entity, Blockworks Foundation, is also facing similar regulatory claims.
The proposed settlement would see Mango DAO neither admit nor deny wrongdoing while paying a fine of $223,228. Mango DAO’s treasury currently holds nearly $2 million in USDC and other assets, though the practical value of these assets was not immediately clear.
During Solana’s 2021 bull run, Mango Markets made headlines by selling $70 million worth of MNGO tokens to the public. At the time, the sale was closed to U.S. investors, likely to avoid regulatory scrutiny, a strategy that has not protected it from the current legal challenges.
