The Securities and Exchange Commission (SEC) has announced that it has filed and settled charges against Mango DAO and Blockworks Foundation for conducting the unregistered offer and sale of MNGO tokens, a type of crypto asset. The SEC also resolved charges against Blockworks Foundation and Mango Labs LLC for operating as unregistered brokers in connection with the sale of various crypto assets classified as securities on the Mango Markets platform. According to the SEC, these entities violated federal securities laws by not complying with registration requirements, denying investors critical protections.

The SEC's complaint highlights that starting in August 2021, Mango DAO, a decentralized autonomous organization, and Blockworks Foundation, a Panamanian entity, raised over $70 million through unregistered sales of MNGO tokens, which serve as governance tokens for Mango Markets. These sales were made to investors worldwide, including in the U.S. The SEC further claims that Blockworks Foundation and Mango Labs operated as unregistered brokers by soliciting users to trade securities on Mango Markets, providing investment advice, and facilitating transactions by helping customers open accounts and manage funds.

Jorge G. Tenreiro, Acting Chief of the SEC’s Crypto Assets and Cyber Unit, emphasized that labeling a project as a DAO does not exempt it from registration requirements. He noted that using automated or open-source software for securities transactions still requires compliance with federal laws.

The SEC has charged Mango DAO and Blockworks Foundation with violations of the Securities Act of 1933 related to securities offering registration. Blockworks Foundation and Mango Labs face charges under the Securities Exchange Act of 1934 for failing to register as brokers. Without admitting or denying the allegations, all parties involved have agreed to settle by paying nearly $700,000 in civil penalties. They have also committed to destroying their MNGO tokens, requesting their removal from trading platforms, and refraining from further solicitation of the tokens. The settlements are pending court approval.

The SEC’s investigation was led by Kristin Pauley, with assistance from Thomas Bedkowski. Alyssa Qualls will lead the litigation, under the supervision of Jorge Tenreiro and Amy Flaherty Hartman.

Resources:

SEC.GOV