The US Securities and Exchange Commission (SEC) recently took significant action against the decentralized application (dApp) Mango DAO along with the Blockworks Foundation. The SEC filed settled charges regarding the unregistered offer and sale of $70 million worth of MGNO tokens, which the agency has classified as crypto asset securities.
Settlement Terms and Financial Penalties
In a notable turn of events, Mango DAO agreed to settle the charges without admitting or denying the allegations. As part of the settlement, Mango DAO has pledged to pay a $700,000 fine and will proceed to destroy their MGNO tokens. In addition, the decentralized autonomous organization plans to request exchanges to halt any further trading of MNGO tokens, marking a significant step in compliance with regulatory demands.
Charges Against Mango DAO Developers
The SEC has not only targeted Mango DAO but also its developer, Mango Labs LLC, which has been charged with engaging in unregistered broker activities. Similar to the broader settlement with Mango DAO, these charges have also been resolved, emphasizing the SEC’s firm stance on regulatory compliance within the cryptocurrency space.
SEC’s Stance on Decentralized Organizations
In its statements, the SEC emphasized that the status of Mango Market as a DAO does not exempt it from its obligations to register the MNGO tokens. The SEC’s Acting Chief of the Crypto Assets and Cyber Unit articulated this viewpoint, underscoring that the designation of ‘DAO’ does not alter the requirements for registration based on the activities conducted.
The Broader Context: SEC’s Crackdown on Crypto
Mango DAO’s situation illustrates the ongoing crackdown by the SEC on the cryptocurrency industry. Since 2022, the agency has been actively asserting its jurisdiction over various entities within the sector, claiming that many are operating outside the compliance mandates established for securities. This enforcement has included numerous lawsuits against major players in the crypto market.
Comments from SEC Leadership
In a recent interview on CNBC, SEC Chair Gary Gensler articulated the motivation behind the agency’s numerous legal actions against the crypto industry. He stated that these efforts are aimed at fostering a safe environment for investors. Gensler remarked, “This field will not long survive if you can’t build that investor trust in the markets.” His perspective casts a broad net, as he has suggested that nearly all cryptocurrencies, with the exception of Bitcoin, qualify as unregistered crypto asset securities.
Industry Reactions and Future Outlook
The regulatory landscape poses concerns for crypto investors, who are optimistic that the upcoming US presidential term could yield more favorable policies for the industry. During the current administration, there has been strong support for the SEC’s stringent regulatory measures. On the other hand, Republican presidential nominee Donald Trump has emerged as a pro-crypto advocate in 2024. He has publicly endorsed Bitcoin and is backing a decentralized finance project initiated by individuals affiliated with his family, known as World Liberty Financial.
In contrast, sitting Vice President and Democratic presidential nominee Kamala Harris has remained largely silent on specific crypto policies, though she has expressed a desire to promote innovation in the sector. As the political landscape evolves, stakeholders in the cryptocurrency market are closely watching for potential shifts in regulatory approaches and industry support.