- Mango DAO is voting on a settlement offer with the SEC.
- The offer involves destroying all of the DAO’s MNGO governance tokens.
- Voting ends on Thursday.
Members of Mango DAO are supporting a proposal that would destroy the MNGO governance token and pay a hefty fine in a proposed settlement with the US Securities and Exchange Commission.
On Monday, a legal representative of Mango DAO, the digital collective that administers the Mango Markets protocol, put the proposal to a vote. It’s already reached the required threshold of votes needed to pass.
“This proposal, if approved, will authorise the DAO Representative to propose a settlement offer to the SEC that would include the payment of a civil penalty in the amount of $223,228,” the proposal said.
Additionally, the DAO would be required to destroy all MNGO tokens in its possession, those it may come to possess in the future, and petition exchanges to delist MNGO for trading within 30 days.
Although the DAO appears keen to offer the settlement to the SEC, there’s no guarantee that the regulator will accept it.
MNGO is Mango DAO’s governance token. Holders gain the right to submit and vote on proposed changes to the protocol, and on how to allocate assets from the DAO’s treasury.
The majority of MNGO is held in the Mango DAO treasury.
Still, there are 1.3 billion MNGO tokens worth some $19.5 million in circulation on the open market, per CoinGecko data.
A company called CyberByte sp. z.o.o is the acting Mango DAO representative responsible for the settlement proposal.
On the Mango DAO Discord — a messaging app — DAO developer Adrian Brzeziński confirmed that he owns CyberByte sp. z.o.o.
Brzeziński did not immediately respond to a request for comment.
Regulator inquiries
Mango Markets used to be one of Solana’s most popular trading venues.
However, in October 2022, convicted crypto trader Avraham Eisenberg attacked the protocol and syphoned out $110 million.
In January 2023, the SEC filed charges relating to the Mango Markets attack against Eisenberg, accusing him of fraud and market manipulation. He was found guilty in April.
In the Mango DAO settlement proposal, Brzeziński said that US regulators had “made their own inquiries into Mango Markets” after bringing charges against Eisenberg last year.
Since these investigations are not public, it isn’t known if the token destruction offer was suggested by a regulator or pre-empted by the DAO.
In May, Mango DAO voted to allow some holders to trade over $10 million worth of MNGO for USDC stablecoins held in the DAO treasury.
Some Mango DAO members accused two senior DAO contributors, John Kramer and Max Schneider, of buying MNGO tokens through an outside company and using them to push through the vote and profit $3 million.
At the time, Schneider told DL News, he “didn’t lie to anyone,” and that everything he had done was in the DAO’s best interests.
He declined to comment on the SEC settlement offer.
SEC fine
The DAO’s proposal offers to pay fines instead of litigation while neither denying nor admitting the SEC’s allegations.
Mango DAO isn’t the only entity implicated in the alleged securities violations.
Mango Labs, the developer of Mango Markets protocol, and the Blockworks Foundation, which helps write and maintain the protocol’s code, are also listed.
As each entity would be fined $223,228, the total proposed payout from the Mango DAO coffers to the SEC totals $669,684.
Mango DAO holds $8.48 million worth of stablecoins and other crypto assets in its reserves, DefiLlama data shows.
The vote ends on Thursday.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at osato@dlnews.com.
Tim Craig is a DeFi Correspondent at DL News. Got a tip? Email him at tim@dlnews.com.
