Mango Labs Takes Legal Action Over $10 Million Embezzlement Allegations

Mango Labs Launches Legal Action Against Former DAO Officials

Mango Labs has taken a bold step in addressing alleged misconduct within its decentralized autonomous organization (DAO). According to recent reports from Cointelegraph, the firm has filed a lawsuit in the United States District Court of Puerto Rico against two of its former officials, John Kramer and Maximilian Schneider.

Allegations of Embezzlement

The lawsuit accuses Kramer and Schneider of embezzling a staggering $10 million from the Mango DAO. Both individuals held trusted positions within the organization, and the complaint outlines how they conspired to profit illicitly by purchasing the DAO’s MNGO governance tokens from the bankrupt FTX.

Details of the Lawsuit

The complaint specifies that if there are additional unknown individuals who assisted Kramer and Schneider in this scheme, Mango Labs intends to serve them legal papers through their crypto wallets. The crux of the allegations is that both men proposed acquiring FTX’s MNGO holdings for the DAO at an advantageous price, ostensibly to protect it from bad actors.

• Date of Alleged Misconduct: Around April 1, 2024
• Amount Paid by DAO: Approximately $2.5 million for over 78 million MNGO tokens

Breach of Fiduciary Duty

The lawsuit refers to several serious allegations against Kramer and Schneider, which include:

• Breach of fiduciary duty
• Violation of the Puerto Rico civil code concerning damages
• Fraud and misrepresentation
• Unjust enrichment

Mango Labs is pursuing monetary damages alongside exemplary and punitive damages, restitution, and disgorgement of any wrongfully obtained funds, particularly interests and fees.

Context of the Allegations

This legal action comes on the heels of another significant trial involving the DAO. Avraham Eisenberg was found guilty of exploiting the DAO for a staggering $110 million. In the aftermath of these events, the Mango Markets, the decentralized exchange operated by Mango DAO, has become the focus of an investigation by the US Commodity Futures Trading Commission (CFTC).

Settlement with the SEC

Furthermore, on September 27, Mango DAO reached a settlement with the US Securities and Exchange Commission (SEC) regarding the sale of unregistered securities. As part of this settlement, the DAO agreed to pay $700,000 and destroy all remaining MNGO tokens.

Conclusion

The unfolding legal challenges and regulatory scrutiny faced by Mango DAO highlight the complexities and risks associated with decentralized financial systems. As the situation develops, it remains to be seen how these proceedings will impact the future of Mango Labs and its community.