On September 27, the U.S. Securities and Exchange Commission (SEC) settled charges against Mango Market's decentralized autonomous organization (DAO) and Blockworks Foundation.
Regulatory scrutiny of the platform had increased after the watchdog accused Mango Markets of misusing $100 million in 2022, accusing both companies of selling unregistered securities.
Under the terms of the settlement, Mango DAO and Blockworks Foundation have agreed to pay a total of $700,000 in civil penalties, destroy the MNGO tokens, and require cryptocurrency exchanges to delist the tokens. Additionally, both entities plan to discontinue token sales in the future.
The proposed settlement does not require either party to admit or reject the SEC's claims and is pending court approval. This comes after Mango DAO passed a community vote to settle with the SEC in August.
A month later, in September, Mango Markets again denied wrongdoing and offered a separate $500,000 settlement with the Commodity Futures Trading Commission (CFTC) to end the regulator's investigation.
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The SEC complaint alleges that Mango DAO and Blockworks Foundation raised more than $70 million in August 2021 through the sale of MNGO governance tokens to investors, including U.S. residents, violating the Securities Act of 1933. are.
Mango Labs is also named in the complaint as an unregistered broker, and the SEC accuses the company of soliciting users of the Mango platform and providing financial advice in violation of the Securities Exchange Act of 1934.
According to the SEC statement:
“We have maintained that the label 'DAO' does not exempt any company from securities laws.”
The regulator added that the use of automated systems or open source technology does not change the legal responsibilities of those operating such projects.
The Mango Markets case highlights continued regulatory efforts to bring decentralized platforms within existing securities laws as the SEC continues to increase enforcement in the crypto industry.
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