As a result of an SEC settlement, governance ballots, and legal complications resulting from a 2022 exploit, Mango Markets, a DEX based in Solana, is ceasing operations.
Solana-based decentralized exchange Mango Markets is discontinuing its operations. Mango Markets announced on January 11 through its X account that it is “closing down” and that users should “close their positions.”
This is in accordance with governance proposals that aim to modify collateral requirements and interest rates, thereby effectively terminating borrowing and lending on the platform. These proposals, which were unanimously approved, are scheduled to be implemented on January 13.
The closure is the result of a resolution with the Securities and Exchange Commission (SEC) of the United States. The SEC filed resolved charges against Mango DAO and the Blockworks Foundation on Sept. 27, 2024, alleging the sale of unregistered securities.
Mango violated the Securities Act of 1933 by selling MNGO governance tokens in August 2021, resulting in the raised of over $70 million, according to the SEC.
Mango’s decentralized autonomous organization (DAO) decided to pay $700,000 in fines, destroy MNGO tokens, and ask platforms to take them off the market as part of the deal.
Jorge Tenreiro, chief of the SEC’s Crypto Assets and Cyber Unit, stated, “Our perspective has been that the term ‘DAO’ does not alter the actuality of the individuals responsible for a project since the inception of our crypto enforcement program.”
On August 19, 2024, the Mango DAO voted to settle with the SEC for $223,228 and destroy MNGO tokens. September 2024 saw the submission of an additional proposal to resolve the matter with the CFTC for a sum of $500,000.
Maximilian Schneider, Britt Cyr, and John Kramer founded Mango Markets in August 2021. As a decentralized exchange and lending mechanism, the platform was constructed on the Solana blockchain. It sought to offer trading and financing services that were both quick and cost-effective by utilizing its governance token, MNGO.
According to DefiLlama, Mango Markets’ total value lockup was $9 million at the time of publication, a 95.7% decrease from its all-time peak of $210 million in November 2021.
Avraham “Avi” Eisenberg, a crypto trader, exploited the platform in October 2022, resulting in the closure of Mango Markets. Eisenberg exploited a vulnerability in Mango’s protocol, resulting in substantial financial losses.
As part of a community governance referendum, he returned $67 million; however, he retained only $40 million. United States authorities apprehended Eisenberg in December 2022 and indicted him on charges of market manipulation and fraud.
Eisenberg has been in custody since his detention, and his sentencing has been postponed on numerous occasions. It was initially scheduled for December 12, 2024, but was subsequently postponed to February 11, 2025, and is now set to take place on April 10, 2025. According to his legal team, the postponement was due to “the intricacy of certain sentencing issues.”
Eisenberg is at risk of potential civil enforcement actions from the SEC and the US Commodity Futures Trading Commission, as well as a maximum sentence of 20 years in prison.
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