Mango Markets shuts down after SEC settlement and 2022 exploit

Mango Markets is a decentralized finance (DeFi) platform built on the Solana blockchain, designed for trading, lending, and borrowing cryptocurrencies.

It enables users to engage in cross-margin trading and leverage various crypto assets through a sophisticated risk engine.

The platform is governed by its community via the Mango DAO, with users participating through the $MNGO token

Key Features

• Cross-Margin Trading: Users can trade with multiple collateral types, enhancing flexibility and efficiency.
• Decentralized and Non-Custodial: Mango Markets operates without central authority, allowing users to maintain control over their assets.
• Yield Farming: The platform supports yield farming opportunities, enabling users to earn interest on their deposits
• Open Source: Transparency is emphasized through its open-source nature, inviting community contributions and improvements.

Mango Markets, a Solana-based decentralized exchange (DEX), has announced its permanent closure following a series of regulatory challenges and fallout from a devastating exploit in 2022.

The platform’s shutdown, confirmed through governance votes and finalized after a settlement with the U.S. Securities and Exchange Commission (SEC), marks the end of a project that once aimed to revolutionize decentralized finance (DeFi).

Closure Announcement and User Deadlines

Mango Markets officially announced the shutdown on January 11, 2025, urging users to close their positions by January 13, 2025, at 8 PM UTC, when the platform’s final governance proposals will take effect.

These proposals include changes to interest rates and collateral requirements, effectively halting all borrowing and lending operations.

Regulatory Scrutiny and Settlements

On Sept. 27, 2024, the SEC filed settled charges against Mango DAO.

The closure follows a settlement with the SEC, which accused Mango Markets’ decentralized autonomous organization (DAO) of selling unregistered securities.

According to the SEC, Mango raised $70 million in August 2021 through the sale of its MNGO governance tokens, violating U.S. securities laws.

As part of the settlement, Mango DAO agreed to:

• Pay $700,000 in civil penalties.
• Destroy all MNGO tokens.
• Petition exchanges to delist MNGO tokens.

“Mango’s case underscores that the label ‘DAO’ does not exempt individuals or organizations from legal obligations,” said Jorge Tenreiro, Chief of the SEC’s Crypto Assets and Cyber Unit.

The 2022 Exploit

Mango Markets’ decline began with a $117 million exploit in October 2022.

Crypto trader Avraham “Avi” Eisenberg manipulated the price of the MNGO token by 1,000% using $5 million in USDC. This allowed him to borrow against artificially inflated collateral, draining funds from the platform.

Although Eisenberg returned $67 million following a governance vote, he retained $40 million.

He was later arrested and charged with fraud and market manipulation. Eisenberg’s legal proceedings remain ongoing, with his sentencing now scheduled for April 2025.

An exploit happened October 2022, where an attacker manipulated the price of its native token, MNGO, leading to a loss of approximately $117 million. 

Community Governance and Declining Value

The decision to shut down the platform received unanimous approval from the Mango DAO, with 23,347,212 votes in favor of closure.

Once valued at $210 million in total value locked (TVL) in November 2021, Mango Markets’ TVL had fallen to $9 million by January 2025, a decline of 95.7%, according to DeFiLlama.

Final Steps Before Closure

In preparation for the shutdown, Mango Markets is implementing the following changes:

• Steep increases in interest rates across assets such as SOL, USDC, USDT, and ETH.
• Raising collateral requirements for new positions by a factor of ten.
• Reducing the target lending ratio from 50% to 0.1%.