Mango Markets Considers Settlement with SEC, Proposal Shows

DeFi securities and exchange commision

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Ruholamin Haqshanas

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Ruholamin Haqshanas

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Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto...

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August 19, 2024

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Mango Markets, a decentralized exchange (DEX) operating on the Solana blockchain, is considering a settlement with the United States Securities and Exchange Commission (SEC) over alleged violations of U.S. securities laws.

The decentralized autonomous organization (DAO) managing Mango Markets initiated a vote on August 19 regarding a proposed settlement with the SEC.

The proposal outlines several key actions, including the payment of fines, the destruction of Mango’s native MNGO tokens, and a request for delisting the token from trading platforms.

Community Members Support Settlement Proposal

As of the latest count, with over two days remaining in the voting period, the proposal has already met the required quorum, with all 106.7 million votes cast in favor of the settlement.

The troubles for Mango Markets trace back to October 2022, when the platform was exploited by trader Avraham Eisenberg.

Following the incident, Mango Markets came under scrutiny from multiple U.S. authorities, including the SEC, the Department of Justice, and the Commodity Futures Trading Commission (CFTC).

The SEC’s investigation concluded that Mango DAO, along with Mango Labs and Blockworks Foundation, had breached various securities regulations.

To resolve these allegations, Mango DAO has proposed a settlement that includes a $223,228 penalty, which would be paid from the DAO Treasury.

The treasury currently holds close to $2 million in USD Coin and other assets.

As part of the settlement, Mango DAO would neither admit nor deny the SEC’s allegations.

The DAO also plans to halt all trading and sales of MNGO tokens within the United States, destroy its remaining token holdings, and seek the delisting of MNGO from exchanges.

While the proposal aims to avoid protracted litigation, it remains subject to approval by the SEC.

Meanwhile, the price of MNGO has increased by 5.3% over the past day, reaching $0.015.

However, the token remains significantly down from its September 2021 peak of nearly $0.50.

$110 Million Mango Markets Exploit

On October 11, 2022, Mango Markets became the victim of an attack that saw approximately $110 million drained from its treasury.

Shortly after the attack, Avraham Eisenberg came forward as the perpetrator, asserting that the exploit was merely a “highly profitable trading strategy” and claiming it was conducted within the bounds of legality and the protocol’s intended design.

According to prosecutors, Eisenberg utilized two accounts to engage in manipulative trading involving futures contracts tied to the values of Mango’s token MNGO and the stablecoin USD Coin.

These trades purportedly inflated the value of his contracts by 1,300% within 20 minutes, allowing him to borrow against his holdings and withdraw $110 million in various cryptocurrencies.

Subsequently, Eisenberg agreed to return $67 million in exchange for other token holders refraining from pursuing legal action or freezing his assets.

He was arrested on December 26, 2022, in San Juan, Puerto Rico, where he resided, and has remained in custody since then, deemed a flight risk by prosecutors.

On January 9, the Commodity Futures Trading Commission (CFTC) supplemented the FBI’s charges, levying two counts of market manipulation against Eisenberg.

A lawsuit filed by Mango Labs characterized Eisenberg as a “notorious online personality” with a history of attacking multiple cryptocurrency platforms and manipulating cryptocurrency markets.