Mango Labs is filing a $10 million lawsuit against two of its own.
Here’s the latest crypto news: Mango Labs is cracking down on what it calls a $10 million scheme that rocked its DAO.
The company has filed a lawsuit against John Kramer and Maximilian Schneider, accusing them of exploiting their trusted roles within the DAO to siphon off funds. The two allegedly orchestrated a scheme to profit off the DAO while buying up FTX’s holdings of MNGO governance tokens on behalf of Mango DAO.
Adding fuel to the fire, other unidentified parties are believed to have helped the duo, and Mango Labs has vowed to track them down.
If these unknown accomplices remain anonymous, the company plans to serve legal papers through their crypto wallets, as stated in the complaint filed in the U.S. District Court of Puerto Rico.
The lawsuit accuses Kramer and Schneider of creating a proposal that was deceptively reasonable on the surface. They initially promised to buy FTX’s MNGO holdings at a bargain price to safeguard the tokens for the DAO, preventing bad actors from acquiring them.
However, the reality was different. Around April 1, 2024, the pair secretly purchased the tokens, transferred them anonymously into the DAO treasury, and then manipulated the governance system to profit.
On April 30, 2024, the Mango DAO was thereby tricked into paying for over 78 million MNGO tokens for approximately $2.5 million pursuant to the Proposal.”
Mango Labs soon discovered the deception. Despite urging Kramer and Schneider to return the tokens at cost, the lawsuit alleges they refused, even pressuring Mango Labs to back down.
The charges against the two include breach of fiduciary duty, fraud, and unjust enrichment. Mango Labs demands full restitution, punitive damages, and a return of the ill-gotten funds, including interest and legal fees.
Meanwhile, this scandal unfolds alongside the trial of Avraham Eisenberg, who was convicted of defrauding Mango DAO for $110 million.
To add to the DAO’s troubles, Mango Markets, the decentralized exchange operated by the DAO, is currently under an ongoing, undisclosed investigation by the U.S. Commodity Futures Trading Commission (CFTC).
On September 27, Mango DAO settled charges with the U.S. Securities and Exchange Commission (SEC) for $700,000 over unregistered securities and agreed to burn all MNGO tokens.
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