Accusations of ‘Self-Dealing’ in Mango Markets DAO Buyback Plan

Controversy has arisen within Mango Markets, a decentralized finance protocol, over a plan to buy back tokens at a premium to the market price. The buyback proposal, made by Mango DAO member DonDuala, was met with suspicion as it was believed to benefit the buyer of a large stash of MNGO tokens transferred from FTX to an anonymous account. Critics accused DonDuala of being connected to the FTX buyer, but no comment was provided on this accusation. Supporters of the plan argued that purchasing MNGO tokens at an underpriced rate would distribute profits to investors. An amended version of the buyback plan was eventually approved.

Mango Markets is a Web3 app operating on the Solana network that allows users to borrow and lend various cryptocurrencies. It is governed by MNGO tokenholders who form the decentralized autonomous organization Mango DAO. The protocol was exploited for $116 million in October 2022, resulting in a decline of over 25% in its token price.

DonDuala proposed on April 7 that Mango DAO buy back 275 million MNGO tokens from current holders in exchange for 9.995 million DAI stablecoin derivative CHAI worth approximately $10.7 million. The buyback price suggested was $0.032 per MNGO token, while the market price was $0.02324, significantly lower. The DAO would issue options tokens that could only be exercised by participating accounts for this proposal.

On April 11, it was discovered that a mysterious account had received MNGO tokens from the bankrupt FTX exchange estate and was voting in favor of the buyback proposal. This raised suspicions of a secret deal between the FTX buyer and the DAO. Claims were made that DonDuala and another DAO member, Maximilian, were affiliated with the FTX-related account. DonDuala defended the proposal, stating that the focus on the FTX buyer was a distraction from the core issue of market efficiency.

The initial proposal failed to pass on April 12, but DonDuala resubmitted an amended version. The new proposal suggested buying back only 156 million MNGO tokens and distributing options to all users who had deposited into Mango DAO’s governance system. Mango Markets co-founder Daffy Durairaj expressed opposition to the proposal, accusing DonDuala and Maximilian of untrustworthy behavior and self-dealing. Despite the criticism, the amended proposal was eventually approved with over 67.9% of tokens voting in favor.

On April 30, options were exercised, resulting in the DAO buying back approximately 73 million MNGO tokens. DonDuala announced a new proposal to use one-eighth of the DAO’s treasury to buy back additional MNGO tokens. The buyback received some backlash on social media, with users claiming that it benefited only certain individuals. Supporters argued that buying back tokens at book value was a reasonable action.

The article also mentions the previous exploitation of Mango Markets, where a user named Avrham Eisenberg was found guilty of fraud. He is scheduled for sentencing on July 29 and has also been charged with possession of child pornography.