Crypto Token Holders Approve SEC Settlement Absent Any Charges

08/21/2024 02:27

(Bloomberg) -- The crypto token holders that manage Mango Markets voted to approve a settlement with the US Securities and Exchange Commission even though the agency hasn’t charged the DeFi platform with any wrongdoing.Most Read from Bloomberg‘Train Lovers’ Organize to Support Harris and Walz in Presidential BidPart of Downtown Montreal Is Flooded After Water Pipe BreaksClimate Disasters Are an Affordable Housing ProblemIn April, a trader accused of exploiting Mango Markets rules to steal $110 m

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In April, a trader accused of exploiting Mango Markets rules to steal $110 million from the decentralized-finance exchange was convicted of fraud in the first US trial involving criminal charges tied to cryptocurrency manipulation.

The settlement would include “the payment of a civil monetary penalty, injunctive relief,” and other provisions, according to the proposal that is posted up for vote on the website of Mango DAO, a decentralized autonomous organization whose members vote on the project’s actions. The DAO also proposed to stop all sales of its governance MNGO token in the US. The SEC still has to accept the proposed settlement offer, according to the DAO, which said it wouldn’t be admitting or denying the SEC’s allegations of violating securities laws.

“As we move further and further into a decentralized world, we are going to see more decisions made in a decentralized way,” said Ari Redbord, global head of policy and government affairs at TRM Labs. “A vote by a DAO on an important issue like whether or not to settle a legal action with a regulator is a great example.”

The SEC charged Avraham Eisenberg in January 2023 with manipulating the MNGO token, which “was offered and sold as a security,” to steal assets from the project. “Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing,” the agency said at the time.

An SEC spokesperson declined to comment.

In recent years, the SEC has filed cases against a slew of crypto projects and exchanges, including Coinbase Global Inc. and Binance Holdings, accusing them of facilitating trading in unregistered securities. The agency has also gone after decentralized projects: It sent a Wells notice, threatening to sue, to Uniswap Labs, according to the decentralized-exchange project. BarnBridge DAO settled with the SEC last year.

“Due to the rules regarding the confidentiality of settlement discussions and because the SEC’s investigation is ongoing and non-public as a matter of law, the DAO Representative is limited in the information that it is permitted to share in a non-privileged context and, as such, cannot comment on the SEC’s investigation or the settlement negotiations in this forum,” the DAO’s proposal said.

While the vote for the proposal is ongoing, the amount already cast in favor of accepting the settlement is enough for a quorum. The voting ends Thursday, according to the DAO’s website.

The MNGO token was little changed at about $0.0154 on Tuesday, according to CoinMarketCap data. It traded as high as 45 cents in September 2021.