Michaela Alvez
Mango Markets, a decentralized finance (DeFI) platform, has decided to cease operations after reaching a settlement with the U.S. Securities and Exchange Commission (SEC) and facing ongoing legal challenges related to a 2022 exploit.
On January 11, Mango Markets announced on its X account that it is shutting down, urging users to “close their positions” in light of the decision.
The announcement follows a settlement with the SEC, which had charged Mango’s decentralized autonomous organization (DAO) and Blockworks Foundation for the unregistered offer and sale of MNGO tokens.
As part of the settlement, Mango DAO agreed to pay $700,000 in civil penalties, destroy MNGO tokens, and request their removal from trading platforms.
The decision to close succeeds governance proposals to modify interest rates and collateral requirements, which will halt borrowing and lending activities on the platform. The shutdown was approved by a unanimous vote, with 23,347,212 votes in favor.
Mango Markets has set a deadline for users to close their positions by January 13, 2025, at 8 PM UTC, when the shutdown proposals will take effect. In anticipation, Mango V4 will begin adjusting its lending parameters.
The updated protocol parameters introduced by the platform include a significant decrease in the target lending ratio, dropping from 50% to just 0.1% of deposits. Additionally, the Mango Markets is set to implement sharp interest rate increases on major cryptocurrencies such as SOL, USDC, USDT, ETH, MSOL, mangoSOL, and INF.
The shutdown also comes in the aftermath of an October 2022 exploit, during which attacker Avraham Eisenberg manipulated the platform’s price oracle and took advantage of system vulnerabilities for financial gain.
Eisenberg began by using $5 million in USDC to carry out a series of trades, which artificially drove up the price of the MNGO token by roughly 1,000%.
This price manipulation enabled Eisenberg to borrow against significantly inflated collateral, ultimately siphoning off $117 million from the protocol.
SEC Vs. Mango Markets
Mango Markets faced further challenges when, in December 2022, the SEC filed a lawsuit against the platform. The regulator accused Mango of raising more than $70 million in August 2021 through the sale of MNGO governance tokens, asserting that the sale violated the Securities Act of 1933.
The SEC claimed that Mango Labs failed to register the token offering as required by law, classifying it as an unlawful sale of securities. Additionally, the SEC accused Mango Labs of acting as an unregistered broker in violation of the Securities Exchange Act of 1934. The commission argued that Mango Labs facilitated trading and engagement in the MNGO token without complying with the necessary regulatory requirements for broker-dealers.
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
