Mango Markets announce plans to wind down operations after technical and legal trouble

Decentralized exchange Mango Markets has announced plans to wind down its operations. The situation became necessary after a settlement with the United States Securities and Exchange Commission (SEC) mandated the Solana-based DEX to destroy all its MNGO tokens. 

According to its post on Discord, the platform is planning to halt operations, signaling a turning point for the project. In his post, Mango Markets co-founder Maximilian Schneider mentioned that its contributors want a move away from the legal challenges that the platform is facing.

Mango Markets bow to regulatory pressure 

According to the platform’s post on X, Mango Markets has informed users to close their positions. The statement noted that borrowing will not be economically viable in the future due to the winding down of Mango V4 and Boost.

Mango Markets’ decision to halt its operations has been received with shock in the crypto community. Most people see it as the work of crypto skeptics among the regulators , tagging it to the increasing scrutiny that decentralized exchanges are facing in the crypto industry.

After its agreement with the SEC to settle the lawsuits associated with its unregistered assets sales, the platform’s Decentralized Autonomous Organization (DAO), the body in charge of governance, will move to destroy its token infrastructure.

The legal challenges leading up to the service’s shutdown underscore the increased and biased scrutiny that the decentralized finance sector suffers from regulators. It is also the latest casualty of decentralized platforms being forced to comply with traditional finance rules.

Mango Markets’ legal troubles began with an exploit 

Mango Markets’ issues began with a big exploit involving Avraham “Avi” Eisenberg. Eisenberg took advantage of some flaws on the platform in October 2022 to withdraw $110 million. His actions led to a legal back and forth that ended up with a jury convicting him on fraud charges.

The exploit dampened user confidence, leading to an internal crisis over the protocol’s direction. The recent SEC issue only worsened the situation, one possible reason why the DEX chose to roll over instead of fighting the regulator.

The situation is proving dire for decentralized platforms as they must beef up security against exploits while worrying about regulators. However, Mango Markets’ case signals a need to settle all internal issues while being proactive.

Mango Markets’ proposal to adjust interest rates and collateral requirements will become actionable on January 13, per its statement. The changes, which have seen massive support, will be undertaken to salvage the remaining economic viability of the platform.

The platform going through a graceful shutdown is also an important moment for contributors who have dedicated efforts to the project. Most members have signaled the need for change even before this decision, but the legal scrutiny and market conditions have provided an opportunity for it.

Meanwhile, the platform will look to stabilize what remains as it continues preparation to halt operations.

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