Mango Markets Token Holders Vote to Approve a Settlement With the SEC

The crypto token holders that manage Mango Markets voted to approve a settlement with the US Securities and Exchange Commission even though the agency hasn't charged the DeFi platform with any wrongdoing.

Crypto token holders that oversee decentralized finance platform Mango Markets are set to vote on whether to accept a settlement with the US Securities and Exchange Commission over allegations that the platform sold an unregistered security.

Despite the agency not leveling any charges against the DeFi platform, token holders will decide whether to accept the settlement, which would include a civil monetary penalty and injunctive relief, according to a proposal posted on the Mango DAO website. The DAO would also stop all sales of its governance MNGO token in the US.

The SEC still has to accept the proposed settlement offer, according to the DAO, which said it wouldn’t be admitting or denying the SEC’s allegations of violating securities laws.

The vote, which began Monday, is the latest development in a regulatory saga that began last year when a trader was accused of exploiting Mango Markets rules to siphon off $110 million from the platform. The trader, Avraham Eisenberg, was later charged by the SEC with manipulating the MNGO token, which “was offered and sold as a security,” to steal the assets.

“Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing,” the agency said at the time.

An SEC spokesperson declined to comment.

The proposal for the settlement comes after the DAO earlier voted to fully cooperate with the SEC investigation and to form a decentralized autonomous organization representative, who would be responsible for engaging with the agency on behalf of the DAO.

The DAO representative would be able to share non-privileged information with the DAO community and would be tasked with negotiating a settlement with the SEC. The representative would also be able to accept service of process on behalf of the DAO.

According to the proposal, the DAO representative “has been engaged in discussions with the SEC staff regarding a potential settlement of the SEC’s investigation.”

“The discussions have been confidential and conducted without the participation of the DAO or any other members of the Mango Community, and the DAO has not been provided with any updates regarding the discussions,” the proposal said.

“As a result of the confidentiality of the discussions and because the SEC’s investigation is ongoing and non-public as a matter of law, the DAO Representative is limited in the information that it is permitted to share in a non-privileged context and, as such, cannot comment on the SEC’s investigation or the settlement negotiations in this forum.”

While the vote for the proposal is ongoing, the amount already cast in favor of accepting the settlement is enough for a quorum. The voting ends Thursday, according to the DAO’s website.

The MNGO token was little changed at about $0.0154 on Tuesday, according to CoinMarketCap data. It traded as high as 45 cents in September 2021.