Mango Labs Sues Executives for Alleged $10M Embezzlement

Mango Labs Files Lawsuit Against DAO Officials for Alleged Embezzlement

Mango Labs, the entity behind the decentralized autonomous organization (DAO), has recently initiated legal proceedings against two officials, John Kramer and Maximilian Schneider. Accused of embezzling a staggering $10 million, the lawsuit has been filed in the United States District Court of Puerto Rico.

Background of the Case

In the complaint, Mango Labs claims that Kramer and Schneider, who hold significant positions of trust within the DAO, colluded to exploit their roles for personal gain. They allegedly engaged in transactions involving the DAO’s MNGO governance tokens, originally from the bankrupt FTX platform.

The Allegations

According to the lawsuit, Kramer and Schneider conspired to buy MNGO tokens held by FTX at a lower price to safeguard these assets from outside malefactors. However, they reportedly acquired these tokens privately around April 1, 2024, depositing them anonymously into the DAO treasury.

Following the acquisition, Kramer allegedly suggested that DAO members sell their MNGO assets back to the DAO at an inflated price, resulting in a purchase exceeding $2.5 million for more than 78 million MNGO tokens.

Legal Violations Cited

The lawsuit outlines several serious allegations against Kramer and Schneider, including:

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

Mango Labs is pursuing various forms of compensation, including monetary damages, punitive damages, restitution, and recovery of all wrongfully obtained funds, along with associated interest and fees.

Context and Ongoing Investigations

This case is notably unfolding in the shadow of another high-profile incident involving Avraham Eisenberg, who was recently convicted of exploiting the Mango DAO for an enormous $110 million. Additionally, the decentralized exchange operated by the Mango DAO, known as Mango Markets, has come under scrutiny from the US Commodity Futures Trading Commission.

SEC Settlement

Moreover, on September 27, Mango DAO reached a settlement with the US Securities and Exchange Commission over allegations of unregistered securities. As part of the agreement, they agreed to pay $700,000 and to destroy all existing MNGO tokens.

Conclusion

The ongoing legal actions highlight the precarious nature of decentralized finance (DeFi) organizations, particularly as governance structures come under fire. As investigations continue and incidents like these are exposed, the need for transparency and ethical conduct within the crypto space remains paramount.