These charges arise from the unregistered offer and sale of MNGO tokens.
These tokens were used as governance tokens for Mango Markets, a platform for trading digital assets. Let’s discover more about this case from the Mango DAO.
Unregistered Token Sales Under Fire
The SEC also charged Blockworks Foundation and Mango Labs LLC with acting as unregistered brokers. Both organizations allegedly recruited people to trade securities on Mango Markets without registering as brokers, which is required by law. The SEC claims these groups endangered investors by not registering, removing key protections under federal securities laws.
According to the SEC, Mango DAO, a decentralized autonomous organization (DAO), and Blockworks Foundation raised over $70 million from the sale of MNGO tokens starting in August 2021. These sales were made to hundreds of investors around the world, including many in the United States, without going through the proper legal channels.
BREAKING: SEC FILES SETTLED CHARGES AGAINST MANGO DAO AND BLOCKWORKS FOUNDATION FOR ENGAGING IN THE UNREGISTERED OFFER AND SALE OF $MNGO TOKENS pic.twitter.com/AOWvSGDnhP
— DEGEN NEWS (@DegenerateNews) September 27, 2024
The SEC’s complaint also says that Blockworks Foundation and Mango Labs acted like brokers without registering. They allegedly helped customers open accounts on Mango Markets, provided advice about investing, and even handled customer funds. All of this should have been done under proper supervision, but they skipped the registration process.
SEC’s Actions
The SEC is cracking down on these kinds of actions to protect investors. According to the SEC, by avoiding the registration process, Mango DAO, Blockworks Foundation, and Mango Labs deprived investors of important protections, leaving them in the dark about potential risks.
The SEC filed the case in the U.S. District Court for the Southern District of New York. The charges against Mango DAO and Blockworks Foundation relate to violations of the Securities Act of 1933, which sets the rules for offering securities. The charges against Blockworks Foundation and Mango Labs relate to the Securities Exchange Act of 1934, which regulates brokers.
Today we filed settled charges against Mango DAO and Blockworks Foundation for engaging in the unregistered offer and sale of crypto assets called “MNGO” tokens. https://t.co/UvS5QiAU7X pic.twitter.com/KF9F5urZ11
— U.S. Securities and Exchange Commission (@SECGov) September 27, 2024
Settling the Case
Without admitting or denying the SEC’s claims, Mango DAO, Blockworks Foundation, and Mango Labs agreed to settle the charges. The groups will pay nearly $700,000 in penalties. They also agreed to destroy their MNGO tokens, remove them from trading platforms, and stop offering or selling MNGO tokens in the future. As the saying goes, “They got caught with their hand in the cookie jar,” but now they are working to make things right. However, these settlements still need approval from the court.
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