Mango Markets, a decentralized exchange based on the Solana blockchain, may soon be required to pay $500,000 in fines as part of a settlement with the Commodity Futures Trading Commission (CFTC). The exchange is facing allegations of operating as an unregistered commodities exchange, illegally serving customers in the United States, and failing to implement proper Know Your Customer (KYC) measures.
In a proposal submitted by Mango Markets’ legal representatives to the Mango DAO on September 22, it was revealed that there is an ongoing and nonpublic investigation by the CFTC. To resolve the matter, the lawyers suggested that Mango Markets pay $500,000.
Due to the confidentiality of the settlement and the ongoing nature of the CFTC’s investigation, the full details of the allegations cannot be publicly disclosed. However, the DAO representative assured Mango DAO members that accepting the settlement would prevent any litigation from the CFTC against the DAO regarding these allegations.
If the settlement is accepted, Mango DAO will neither admit nor deny any wrongdoing. The proposal is currently on track for approval, as it has received overwhelming support from DAO members, with 123,475,000 votes in favor and none against.
This is the second time in just over a month that Mango DAO has proposed paying a substantial amount to avoid regulatory action. In August, the DAO agreed to a settlement with the Securities and Exchange Commission (SEC) over allegations of violating US securities laws. Additionally, the DAO transferred $670,000 worth of USD Coin (USDC) to the SEC to resolve an investigation into the sale of its native MNGO token as an unregistered security.
Mango Markets has faced significant challenges since falling victim to a $110 million exploit in October 2022, which resulted in trader Avraham Eisenberg being charged with fraud and market manipulation. Following the exploit, the SEC, the Department of Justice (DOJ), and the CFTC initiated investigations into Eisenberg and began closely examining Mango Markets. The SEC specifically accused Mango DAO, Mango Labs, and Blockworks Foundation of violating securities regulations.
In summary, Mango Markets, a decentralized exchange operating on the Solana blockchain, is facing potential fines of $500,000 as part of a settlement with the CFTC. The exchange is accused of various violations, including failing to register as a commodities exchange, offering services to US customers illegally, and lacking sufficient KYC measures. Mango DAO members are currently supporting the proposed settlement, which would prevent litigation from the CFTC. This follows a previous settlement with the SEC regarding allegations of securities law violations. Mango Markets has faced significant challenges since a major exploit in 2022, leading to further scrutiny from regulatory authorities.