Mango Markets, a decentralized exchange (DEX) built on the Solana blockchain, has announced its closure following a settlement with the U.S. Securities and Exchange Commission (SEC). The decision comes after a series of governance proposals aimed at adjusting interest rates and collateral requirements, effectively ceasing all borrowing and lending activities on the platform. Users have been advised to close their positions as the shutdown takes effect on January 13, 2025.
Source: Mango Markets
Key Takeaways
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Mango Markets is shutting down operations due to an SEC settlement.
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The platform faced legal challenges after raising over $70 million through unregistered securities.
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A significant exploit in 2022 led to financial losses and ongoing legal troubles for the platform.
SEC Settlement Details
On September 27, 2024, the SEC filed settled charges against Mango DAO and the Blockworks Foundation, alleging the sale of unregistered securities. The SEC claimed that Mango raised over $70 million in August 2021 by selling MNGO governance tokens, violating the Securities Act of 1933. Additionally, Mango Labs was accused of acting as an unregistered broker, breaching the Securities Exchange Act of 1934.
As part of the settlement, Mango’s decentralized autonomous organization (DAO) agreed to pay $700,000 in civil penalties, destroy MNGO tokens, and petition exchanges to delist these tokens. Jorge Tenreiro, chief of the SEC’s Crypto Assets and Cyber Unit, emphasized that the label "DAO" does not exempt projects from regulatory scrutiny.
Governance Votes and Financial Decline
The Mango DAO voted on August 19, 2024, to settle with the SEC for $223,228 and to destroy MNGO tokens. A subsequent proposal to settle with the Commodity Futures Trading Commission (CFTC) for $500,000 was also approved in September 2024.
At the time of its closure announcement, Mango Markets reported a total value locked of $9 million, a staggering 95.7% decline from its all-time high of $210 million in November 2021, according to DefiLlama.
A History of Exploits and Legal Troubles
The shutdown of Mango Markets can be traced back to a significant exploit in October 2022, when crypto trader Avraham “Avi” Eisenberg drained over $100 million from the platform. Eisenberg exploited a vulnerability in Mango’s protocol, resulting in substantial financial losses. Although he returned $67 million as part of a community governance vote, he retained $40 million.
Eisenberg was arrested by U.S. authorities in December 2022 and charged with fraud and market manipulation. His sentencing has faced multiple delays, with the latest date set for April 10, 2025. He faces a maximum sentence of 20 years in prison and potential civil enforcement actions from both the SEC and the CFTC.