- Mango DAO faces potential SEC settlement violation after John Kramer and Max Schneider gained majority voting control through a controversial token proposal
- The pair locked up 80 million MNGO tokens to receive 67.5 million token options, despite warnings about SEC settlement breach
- Mango Labs founder Dafydd Durairaj warned the proposal could reopen SEC case and lead to legal consequences
- Schneider defends the proposal as fulfillment of pre-existing agreements, denying it creates a voting majority
- The situation follows a recent lawsuit accusing Kramer and Schneider of $10 million embezzlement during the Avraham Eisenberg trial
Control Shift at Mango DAO Sparks SEC Compliance Concerns
Mango DAO, a decentralized finance protocol, reportedly ceased effective operations last week following a contentious governance proposal that granted significant voting power to John Kramer and Max Schneider, potentially violating a standing SEC settlement agreement.
The proposal, which passed on Saturday, enabled the distribution of 67.5 million MNGO options in exchange for locking up 80 million tokens. This move has raised substantial concerns about the DAO’s compliance with its existing SEC settlement terms.
Settlement Violation Risks
Mango Labs founder Dafydd Durairaj expressed serious concerns about the proposal’s implications, stating in the Mango DAO Discord that "The SEC could reopen the case, and we might face consequences from the court for violating the settlement. This puts all of US in grave jeopardy."
The existing SEC settlement requires Mango DAO, Blockworks Foundation, and Mango Labs to:
- Destroy their MNGO tokens
- Pay a $700,000 fine
- Prevent MNGO trading on other platforms
Governance Power Struggle
The approved proposal includes two separate token option distributions: 60 million and 7.5 million tokens, reportedly due on October 4 and November 17, respectively.
Schneider maintains that the distribution represents a "pre-existing agreement of the DAO" that should be honored, rejecting accusations about creating a voting majority. He countered Durairaj’s warnings, claiming they were attempts to "distract people and enrich yourself by breaking every promise you gave me."
Legal Complications
This governance dispute occurs amid broader legal challenges. A DeFi/lawsuit-alleges-mango-markets-dao-leaders-embezzled-millions/”>lawsuit filed by Mango Labs in October alleges that Kramer and Schneider embezzled $10 million during the trial of Avraham Eisenberg, who was convicted of fraudulently obtaining $110 million from the protocol.
The DAO narrowly maintained SEC compliance in October when a second proposal to pay the required SEC fine passed after an initial rejection.
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