Mango Labs is going after two trusted members of its DAO who embezzled $10 million by manipulating MNGO prices.
Hacks, losses, and lawsuits have become a mainstay for Mango Labs, as it recently filed a new lawsuit, this time against two trusted members of the Mango decentralized autonomous organization (DAO). John Kramer and Maximilian Schneider are accused of embezzling $10 million from the DAO.
The suit, filed in the US District Court of Puerto Rico, mentions Kramer and Schneider manipulated the market around MNGO tokens to profit at the expense of the DAO and its members. Other unnamed perpetrators are also accused of aiding the duo in their profit-making endeavor. Mango would be serving these unknown individuals with paperwork via their crypto wallets.
Kramer and Schneider are alleged to have taken advantage of the DAO beginning FTX offering to sell about 330 million MNGO tokens as part of its bankruptcy proceeding. While the DAO decided to go for it, with the duo in charge of acquiring the tokens from FTX and depositing them to it, the narrative changed for the worse.
The two trusted DAO members decided to go about acquiring the tokens secretly and deny buying them ever. That was because they wanted to use the MNGO tokens, which carry governance utility in the DAO, to pass a proposal. That proposal involved the DAO buying members’ tokens at a premium, which amounts to close to twice the market price at the time. They could easily pass the proposal due to the sheer number of tokens they held, a portion of which were then sold at a premium. The DAO bought 72.8 million tokens for $2.5 million.
Kramer and Scheider have denied being involved in the embezzlement scheme, while on-chain data connects the wallet associated with the FTX purchase to those held by a trading firm, CKS Systems. The trading firm is owned by the accused pair. Mango Labs is using this as evidence to back its allegations.
Mango Settled With the SEC Last Month
The US Securities and Exchanges Commission (SEC) settled with Mango Labs late last month for violating securities laws. Mango Labs and its affiliates operated as unlicensed brokers by selling MNGO to investors in the US and around the world. The regulator obtained $700,000 in penalties and banned MNGO tokens from being offered on exchanges. Mango Labs must also destroy all its MNGO tokens.
