Key Takeaways
- The DEX Mango Markets is facing a proposed settlement with the SEC over allegations of securities law violations.
- The settlement involves a $223,228 fine and the termination of the MNGO token, which could significantly impact the DAO’s future operations.
- The resolution of this case could set a precedent for how other DeFi protocols interact with securities regulators.
Mango Markets, a once-thriving decentralized exchange on the Solana network, is on the cusp of a major reckoning.
After a tumultuous showdown with the SEC over allegations of securities law violations, the platform’s governing body, Mango DAO, is putting a settlement proposal to a vote.
The deal on the table is a stark one: pay up in fines and shut down operations of its flagship MNGO token.
Mango DAO Proposes Settlement with SEC Following $110M Exploit
The proposed settlement between Mango DAO and the SEC directly responds to the exploit that shook the protocol in October 2022. Avraham Eisenberg, a self-proclaimed “applied game theorist,” manipulated the price of Mango Markets’ token, MNGO, and futures contracts pegged to its value, ultimately extracting $110 million in cryptocurrencies without any intention of repayment.
Eisenberg’s scheme involved exploiting a feature on the exchange that allowed him to “borrow” against his holdings, which he used to inflate the price of MNGO tokens by 1,300% in just 20 minutes.
This premeditated fraud not only damaged Mango Markets but also led to a series of investigations by US regulators, including the SEC, DOJ, and CFTC.
In April, Eisenberg was convicted of commodities fraud, commodities manipulation, and wire fraud related to his activities on Oct. 11, 2022.
The SEC has since accused Mango DAO of violating Sections 5(a) and 5(c) of the Securities Act of 1933, with additional allegations against Mango Labs and the Blockworks Foundation for breaching Section 15(a) of the Securities Exchange Act of 1934.
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