TL;DR
- Mango Markets is considering a settlement with the SEC involving fines, destruction of MNGO tokens, and delisting the token from exchanges.
- Community support is strong, with over 106.7 million votes in favor of the settlement proposal, which aims to resolve allegations of securities law violations.
- The $110 million exploit in October 2022 by Avraham Eisenberg led to significant scrutiny and legal actions, culminating in the current settlement discussions.
Mango Markets, a decentralized exchange (DEX) built on the Solana blockchain, is exploring the possibility of settling with the United States Securities and Exchange Commission (SEC) regarding accusations of breaching U.S. securities regulations.
On August 19, the DAO in charge of Mango Markets kicked off a vote about a suggested settlement with the SEC. This proposal includes some important steps, like paying fines, getting rid of Mango’s native MNGO tokens, and asking to remove the token from trading platforms.
Community Members Support Settlement Proposal
So far, with more than two days left to vote, the proposal has hit the necessary quorum, racking up over 106.7 million votes in support of the settlement. The issues for Mango Markets started back in October 2022 when trader Avraham Eisenberg took advantage of the platform.
After the incident, Mango Markets came under the microscope of several U.S. agencies, like the SEC, the Department of Justice, and the CFTC. The SEC wrapped up its investigation and found that Mango DAO, along with Mango Labs and Blockworks Foundation, violated several securities laws.
Mango Markets’ Proposed Settlement Details
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 nearly $2 million in USD Coin and other assets.
In the settlement deal, Mango DAO isn’t admitting to or denying the SEC’s claims. They also intend to stop all trading and sales of MNGO tokens in the U.S., get rid of their leftover token stash, and push for MNGO to be delisted from exchanges.
This plan is meant to steer clear of a lengthy legal battle, but it still needs the SEC’s green light. On a side note, MNGO’s price has jumped by 5.3% in the last 24 hours, hitting $0.015.
The token is still way down from its high of almost $0.50 back in September 2021. On October 11, 2022, Mango Markets got hit by a hack that resulted in about $110 million being siphoned off from its treasury.
Right after the incident, Avraham Eisenberg stepped up and admitted to being behind the attack, claiming it was just a “super profitable trading strategy” and that he operated within the law and the protocol’s design.
Prosecutors allege that Eisenberg used two accounts to manipulate trades involving futures contracts linked to the value 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.
Later on, Eisenberg decided to hand back $67 million in return for other token holders not going after him legally or trying to freeze his assets. He got arrested on December 26, 2022, in San Juan, Puerto Rico, where he lived, and has been in custody ever since, as prosecutors consider him a flight risk.
