Table of Contents
- Stakeholders Reluctant to Foot the Bill
- Strained Resources and Legal Battles
- Founder's Dilemma and Second Funding Proposal
Stakeholders of blockchain-based trading protocol Mango Markets are grappling with financial challenges as the platform faces mounting legal expenses in the aftermath of a significant crypto market manipulation incident.
Stakeholders Reluctant to Foot the Bill
About a year ago, crypto market manipulator, Avi Eisenberg, had reportedly raided Mango Markets for over $100 million. He was arrested soon after confessing to the exploit, and the company has been pursuing legal action against him since then. However, the platform's stakeholders are now finding it difficult to cover the escalating legal costs.
A proposal by Mango Labs, the company responsible for developing the Solana blockchain-based exchange, sought approval for an additional $2 million in funding for legal expenses. The proposal was put to a vote within Mango DAO, the decentralized autonomous organization overseeing the protocol.
Initial voting results indicate that Mango DAO voters are hesitant to provide the requested funds. The proposal was rejected by the voters over the weekend, with one individual referring to the situation as a "money pit."
Strained Resources and Legal Battles
Project insiders have demanded greater transparency regarding budget management from the company. Despite the availability of approximately $89 million in the Mango DAO treasury, most of these funds are tied up in illiquid MNGO tokens, making quick liquidation a challenge. The primary source for potential funding lies in a stash of dollar-linked stablecoins valued at $15.3 million, denominated mostly in USDC.
The platform's financial constraints have arisen after Mango Labs exhausted its 2023 budget of nearly $2 million, significantly ahead of schedule. The company is actively pursuing a costly civil suit against Avi Eisenberg, who still claims that he did nothing wrong and was only participating in regular market strategies.
Founder's Dilemma and Second Funding Proposal
Mango Labs' founder, Daffy Durairaj, personally holds enough MNGO governance tokens that could influence the vote's outcome. However, due to scrutiny from regulatory bodies like the SEC regarding the centralization of Mango's governance token, Durairaj might be cautious about leveraging his tokens to secure the funds. Despite the initial setback, Durairaj has initiated a second funding proposal identical to the first, indicating the company's persistence in seeking financial support for legal expenses.
“This funding is necessary to handle legal costs of regulatory inquiries that have arisen after the exploit last year, cooperation with law enforcement and regulators and pursuing legal claims against Avi Eisenberg to help recover funds for the DAO.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.