SEC Charges Mango DAO and Blockworks Foundation with Unregistered Token Sale and Broker Activity

The SEC has charged Mango DAO, a decentralized autonomous organization, and Blockworks Foundation, a Panama-based entity, with the unregistered sale of 'MNGO' tokens and unregistered broker activity related to the Mango Markets platform.

The SEC has charged Mango DAO and Blockworks Foundation with the unregistered sale of ‘MNGO’ tokens and unregistered broker activity related to the Mango Markets platform.

The SEC alleges that Mango DAO, a decentralized autonomous organization, and Blockworks Foundation, a Panama-based entity, raised over $70 million from the sale of MNGO tokens starting in August 2021. The SEC claims that these entities bypassed protections meant to safeguard investors by avoiding federal registration rules.

All parties charged settled the charges, agreeing to destroy their tokens and pay a fine.

The MNGO tokens acted as governance tokens, allowing holders to have a say in how Mango Markets operates. Mango Markets is a crypto trading platform where users can trade digital assets.

Mango Markets recently allocated $250,000 in USD Coin (USDC) to address U.S. regulatory scrutiny, following a series of regulatory challenges, including a 2022 Avraham Eisenberg hack that resulted in $116 million in losses.

Crypto lawyer Bill Hughes suggested on X that Eisenberg’s Mango Market hack and subsequent conviction threw more scrutiny on the entire project, eventually culminating in settled SEC charges and a monetary fine.

Mango token ICO didn't require proof you weren't a US person, so US persons participated. US persons also helped create Mango Markets and got a token allocation as compensation for their work. The Mango DAO website was accessible by US persons. Mango Markets was accessed by US…

Unregistered brokers

The SEC also charged Blockworks Foundation and Mango Labs LLC with acting as unregistered brokers, alleging that they recruited users to trade on Mango Markets and provided advice and valuations on investment opportunities.

According to the SEC, this activity meant that the entities were operating as brokers without the necessary regulatory registration.

Similarly, on Sept. 18, the SEC charged Rari Capital and its co-founders for acting as unregistered brokers. They allegedly conducted unregistered securities offerings through investment products holding over $1 billion in crypto assets.

For context, the SEC requires entities offering securities, such as stocks or tokens with investment features, to register with them to ensure investor protections. This includes adhering to strict disclosure rules and other regulations.

Mango Markets destroying tokens

Mango DAO, Blockworks Foundation, and Mango Labs agreed to settle the SEC charges without admitting or denying the allegations.

All charged parties agreed to pay nearly $700,000 in penalties, destroy their MNGO tokens, and request that these tokens be removed from trading platforms. They also agreed not to solicit trading of MNGO tokens in the future.