The U.S. Securities and Exchange Commission (SEC) has filed an opposition to cryptocurrency project Mango Labs’ bid to undo a $700,000 settlement, asserting that changes in the agency’s crypto policy and the dismissal of certain enforcement actions do not justify reopening the case.
In a Thursday filing in the U.S. District Court for the Southern District of New York, the SEC urged the court to uphold the original judgment, emphasizing that Mango Labs has not demonstrated extraordinary circumstances warranting relief under Rule 60, which allows courts to relieve a party from a final judgment or order.
“The court should hold Mango Labs to the deal it freely negotiated, fully aware that a future commission could adopt a new approach to crypto-related matters,” the SEC stated.
Mango Labs, along with its affiliated entity Blockworks Foundation, entered into the settlement in October 2024 without admitting or denying allegations that it conducted a $70 million unregistered securities offering of its MNGO token. As part of the settlement, the crypto project agreed to destroy its MNGO tokens, request their removal from exchanges, and pay $700,000 in total penalties.
The SEC originally investigated the project following a 2022 exploit that drained over $100 million from Mango Markets, the decentralized exchange managed by Mango Labs and Blockworks Foundation. Mango Labs argued in June that its cooperation with authorities after the incident, as well as subsequent policy shifts in SEC crypto enforcement, should allow the settlement to be revisited.
The SEC rejected this claim, noting that the settlement allowed Mango Labs to avoid costly litigation and potential harsher penalties. According to the agency, Rule 60 does not permit a party to undo a previously agreed settlement, even in the wake of a policy change or unrelated case dismissals.
“Having already obtained the benefit of avoiding the substantial costs and risks by settling instead of continuing to litigate, Mango Labs should not now be allowed to avoid the settled outcome to which it agreed,” the SEC emphasized.
The SEC further noted that while other crypto enforcement matters have been dismissed, those cases involved mutual agreement during active litigation, unlike Mango Labs’ one-sided request to undo the final judgment. The agency also differentiated the situation from its prior actions in the Ripple Labs matter, where amendments were sought in collaboration with the other party.
The SEC is represented by Alyssa A. Qualls and Kristin Pauley. Mango Labs and Blockworks Foundation are represented by Michael Burshteyn of Greenberg Traurig LLP and Rafael Yakobi of The Crypto Lawyers PLLC.
