SEC brought token-offering and broker charges against Mango Markets entities

The U.S. Securities and Exchange Commission filed settled charges on September 27, 2024 against Mango DAO, Blockworks Foundation and Mango Labs LLC over the MNGO token and activity around the Solana-based Mango Markets trading platform. The proposed resolution mattered beyond one decentralized-finance project: it paired an unregistered-offering case against a DAO with broker-registration allegations against organizations that helped build, promote and operate access to blockchain trading software.

The settlement was not yet final on September 27. The three defendants agreed, without admitting or denying the SEC’s allegations, to injunctions and civil penalties totaling nearly $700,000. They also agreed to destroy MNGO tokens under their control, ask trading platforms to remove MNGO and stop soliciting platforms to trade or offer the token. Court approval was still required.

What the SEC alleged

The complaint, filed in the U.S. District Court for the Southern District of New York as case 1:24-cv-07334, separated two legal theories.

First, the SEC alleged that Mango DAO and Panama-based Blockworks Foundation violated Sections 5(a) and 5(c) of the Securities Act by offering and selling MNGO without registration. According to the complaint, the August 2021 sale distributed 500 million MNGO at 0.141 USDC per token and raised more than $70 million from hundreds of buyers worldwide, including U.S. investors. Those figures are regulator allegations drawn from the filed complaint, not Coinburn calculations or independently audited fundraising data.

The SEC characterized MNGO as an investment contract despite its stated governance function. Its complaint alleged that buyers pooled economic exposure and reasonably expected the token’s value to benefit from the platform-development work of Blockworks Foundation and, later, Mango Labs. That was the agency’s pleaded case; the proposed settlement did not produce a judicial ruling after trial on MNGO’s legal status.

Second, the SEC alleged that Blockworks Foundation and Mango Labs had acted as unregistered brokers since at least August 2021. The complaint said the organizations solicited users, supplied advice and valuations, helped users open accounts, routed orders and regularly handled customer funds and crypto assets through the Mango interface. The agency charged those activities under Section 15(a) of the Exchange Act.

Why the DAO structure mattered

Mango Markets used smart contracts and governance voting, features often described as decentralized. The SEC’s action showed its event-day position that organizational labels and open-source or automated software did not eliminate registration duties when identifiable parties performed functions the agency considered securities intermediation.

That distinction was institutionally important. A protocol can execute transactions through public blockchain code while websites, developers, foundations and service organizations still shape how users reach it. The complaint focused on those human and organizational roles rather than alleging that software itself could register as a broker.

The case therefore did not establish that every DAO member, developer or interface operator was a broker. Nor did it set a general rule for every governance token. It applied the SEC’s theories to alleged facts involving this token sale, these entities and their work around Mango Markets.

What was known on September 27

Contemporaneous reporting from Reuters and CoinDesk confirmed the filing and proposed settlement. CoinDesk also reported that Mango DAO had held an open governance vote on the settlement proposal more than a month earlier, illustrating that decentralized governance participated in the path toward resolving a conventional federal enforcement case.

No price or trading-volume claim is needed to establish the development’s importance. MNGO traded across venues with differing liquidity and daily cutoffs, and the cited records do not provide a reliable event-window study. This reconstruction therefore makes no claim that the filing caused a particular move in MNGO, SOL or the wider crypto market.

The defensible September 27 conclusion is narrower: the SEC formally brought registration claims against the organizations behind a DAO-governed trading project, while the defendants accepted substantial token-removal obligations and penalties subject to a federal judge’s approval. The action made organizational responsibility—not the rhetoric of decentralization—the central regulatory issue.