Solana-based decentralized exchange Mango Markets could soon be fined another $500,000 to settle allegations brought by the United States Commodity Futures Trading Commission (CFTC).
In a Sept. 22 proposal from Mango Markets’ legal representatives to the Mango DAO, the lawyers noted an “ongoing and nonpublic” investigation from the CFTC. They suggested fronting up half a million dollars to end it.
According to the proposal and additional statements in the Mango Markets’ Discord server, the decentralized exchange (DEX) faces charges from the CFTC for allegedly failing to register as a commodities exchange, illegally offering services to customers in the US and failing to implement sufficient Know Your Customer measures.
The Mango DAO representative noted that due to the confidentiality of the settlement and the ongoing nature of the CFTC’s investigation, they couldn’t publicly disclose the full details of the matter.
Despite this, the representative assured Mango DAO members that a settlement would “avoid the CFTC bringing any litigation against the DAO with respect to these allegations.”
The proposal clarifies that Mango DAO would not admit or deny any wrongdoing if CFTC commissioners accept the settlement.
At the time of publication, the proposal is charting a direct course for approval. It has received support from decentralized autonomous organization (DAO) members, with 123,475,000 votes in favor of the settlement and zero votes against it.
The proposal has received outright support from members of Mango DAO. Source: Mango DAO
This marks the second time in just over a month that Mango DAO has proposed paying a six-figure sum to stem potential regulatory action.
Related: Eisenberg seeks to have Mango Markets fraud convictions thrown out
On Aug. 19, the DAO voted to pay a settlement to the Securities and Exchange Commission over allegations that it violated US securities laws. A week later, on Aug. 26, the DAO transferred $670,000 in USD Coin (USDC) to the regulator to end an ongoing investigation into sales of its native Mango (MNGO) token as an unregistered security in 2021.
The Solana-based DEX has struggled since it fell victim to a $110 million exploit in October 2022 when trader Avraham Eisenberg manipulated the protocol for personal gain. This led to Eisenberg facing a criminal trial for fraud and market manipulation in April.
Following the exploit, the CFTC, SEC and the US Department of Justice launched respective investigations into Eisenberg and began scrutinizing Mango Markets more closely. The SEC claimed that Mango DAO, Mango Labs and Blockworks Foundation violated various securities regulations.
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