Solana-based decentralized exchange (DEX) Mango Markets could soon pay a hefty $500,000 fine to settle allegations from the Commodity Futures Trading Commission (CFTC). According to a proposal submitted to Mango DAO on Sept. 22, the exchange is under investigation for multiple violations, including operating as an unregistered commodities exchange in the U.S. and lacking proper Know Your Customer (KYC) measures.
The proposal, drafted by Mango Markets’ legal representatives, suggests the DEX settle the ongoing CFTC investigation by paying $500,000. The investigation remains confidential, and specific details of the allegations are not fully disclosed. However, the settlement aims to prevent further litigation from the CFTC.
Details of the CFTC Investigation
According to statements on Mango Markets’ Discord server, the CFTC’s charges revolve around the DEX’s failure to register as a commodities exchange, its illegal offerings to U.S. customers, and inadequate KYC procedures. The DAO representative assured members that the settlement would not require Mango Markets to admit or deny any wrongdoing. The goal is to end the investigation without any further legal battles.
At the time of publication, the proposal is on track for approval. Mango DAO members have overwhelmingly supported the settlement, with over 123 million votes in favor and none against.
Ongoing Regulatory Scrutiny
This marks the second significant regulatory settlement for Mango Markets in recent months. On Aug. 19, Mango DAO proposed paying the U.S. Securities and Exchange Commission (SEC) $670,000 to settle charges that it violated securities laws. The SEC had accused Mango Markets of selling its native MNGO token as an unregistered security in 2021. The DAO approved the settlement, and the funds were transferred to the SEC a week later.
The increased regulatory scrutiny comes after a massive exploit in October 2022, where trader Avraham Eisenberg manipulated Mango Markets, resulting in a $110 million loss. Eisenberg was later charged with fraud and market manipulation, leading to investigations from the SEC, DOJ, and CFTC into Mango Markets’ operations. As regulatory pressure mounts, Mango Markets continues to navigate legal challenges while striving to recover from the devastating exploit.
