Mango Markets to resume operations amid SEC allegations

The Mango Markets developers said they are ready to reboot the protocol, despite allegations by the U.S. Securities and Exchange Commission (SEC). The regulator regards the project’s native token MNGO as a security, according to CoinDesk.

During a team call on January 23, Mango Markets founder Daffy Durairaj pledged to continue updating the platform’s software. It will allow resuming operations with the fourth version of the protocol.

Mango dev call starting now in the discord Mango Meetup Stage https://t.co/o2me8KeOXf

— Mango (@mangomarkets) January 22, 2023

In October, a group of traders led by Avraham Eisenberg attacked the Solana-based DeFi trading platform and withdrew digital assets worth about $116 million. The project community supported the deal with the hackers, under which they returned $69 million, leaving $47 million as a bounty.

In December, the U.S. attorney’s office arrested Eisenberg on charges of fraud involving commodity futures and price manipulation. In January, charges against the trader were brought by the CFTC and SEC.

Regulatory experts said, as part of the case, that the MNGO token sale could have been an unregistered securities offering.

Lawyers confirmed to the publication that this could form the basis for the regulator to file a civil suit against the platform.

“Noting that American investors were allegedly involved in the token sale, the SEC implies that it has the authority to open in the future a case of an unregistered securities offering,” commented Howard Fischer, partner at Moses Singer.

In court filings in Avraham Eisenberg’s case, the Commission’s lawyers mentioned the project promoting the upcoming launch of a new version of the protocol.

The regulator’s interest in the project, which could spell trouble for it, was noted by Durairaj during talks with the developers.

“There are certain concerns that they are eyeing Mango v4’s launch. I don’t know exactly what worries them or why they added this to the suit. We have something to discuss,” he said.

Durairaj noted that Mango Labs, the project’s backing, spent around $400,000 on legal costs in 2022. He believes these costs will rise significantly in the near future. The founder asked the DAO to allocate a grant of $1.5 million to pay for lawyers.

As noted, Grayscale Investments CEO Michael Sonnenshein called the SEC’s approach to regulating the crypto industry through enforcement actions “one-dimensional.” Former agency official John Reed Stark, by contrast, considered the Commission’s policy to be correct.

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