Mango Markets, a decentralized exchange built on the Solana blockchain, is potentially facing a $500,000 fine as part of a settlement regarding allegations from the United States Commodity Futures Trading Commission (CFTC).
In a proposal submitted to the Mango DAO on September 22, the legal team for Mango Markets highlighted an “ongoing and nonpublic” investigation by the CFTC and suggested that the organization pay the proposed amount to resolve the situation.
According to details within the proposal and comments shared on the Mango Markets’ Discord server, the decentralized exchange is accused of not registering as a commodities exchange, illegally providing services to U.S. customers, and lacking adequate Know Your Customer (KYC) protocols.
A representative from Mango DAO emphasized that due to the confidential nature of the settlement discussions and the CFTC’s ongoing investigation, they were unable to publicly disclose comprehensive details about the case. Nevertheless, they reassured members that reaching a settlement would prevent the CFTC from pursuing litigation against the DAO concerning these allegations.
The proposal also states that if the settlement is accepted by CFTC commissioners, Mango DAO would neither admit nor deny any wrongdoing.
As of the latest update, the proposal is on track for approval, garnering substantial backing from DAO members, with 123,475,000 votes in favor and none against.
Support for the proposal is evident among Mango DAO members. Source: Mango DAO
This marks the second instance in just over a month that Mango DAO has suggested disbursing a significant sum to mitigate potential regulatory repercussions.
On August 19, the DAO agreed to settle with the Securities and Exchange Commission (SEC) over allegations of violating U.S. securities laws. Following that, on August 26, the DAO transferred $670,000 in USD Coin (USDC) to the SEC to conclude an investigation regarding the sale of its native Mango (MNGO) token as an unregistered security in 2021.
Mango Markets has faced challenges since suffering a $110 million exploit in October 2022, when trader Avraham Eisenberg manipulated the protocol for his own benefit. This incident led to Eisenberg being charged with fraud and market manipulation in a criminal trial in April.
In the aftermath of the exploit, the CFTC, SEC, and the U.S. Department of Justice initiated separate investigations into Eisenberg while also increasing scrutiny on Mango Markets. The SEC alleged that Mango DAO, Mango Labs, and Blockworks Foundation had breached various securities regulations.
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