Mango Labs Sues Executives Over Alleged $10 Million Embezzlement

According to Cointelegraph, Mango Labs has initiated legal action against John Kramer and Maximilian Schneider, accusing them of embezzling $10 million from the Mango decentralized autonomous organization (DAO). The lawsuit, filed in the United States District Court of Puerto Rico, alleges that Kramer and Schneider, who hold positions of trust within the DAO, conspired to illicitly profit while purchasing bankrupt FTX’s holdings of the DAO’s MNGO governance tokens on behalf of the DAO. The complaint also mentions unknown individuals who allegedly aided Kramer and Schneider. If their identities remain undisclosed, Mango Labs intends to serve them papers via their crypto wallets. The suit claims that Kramer and Schneider proposed buying FTX’s MNGO holdings for the DAO at a favorable price to prevent bad actors from acquiring them. However, they allegedly bought the tokens secretly on or around April 1, 2024, and deposited them into the DAO treasury anonymously. Subsequently, Kramer proposed that DAO members sell their MNGO to the DAO at an inflated price, leading to the DAO paying approximately $2.5 million for over 78 million MNGO tokens. The lawsuit accuses Kramer and Schneider of breach of fiduciary duty, violation of the Puerto Rico civil code article on damages, fraud/misrepresentation, and unjust enrichment. Mango Labs is seeking monetary damages, exemplary and punitive damages, restitution, and disgorgement of wrongfully obtained funds, including interest and fees. The alleged misconduct occurred concurrently with the trial of Avraham Eisenberg, who was found guilty of exploiting the DAO for $110 million. Since then, Mango Markets, the decentralized exchange operated by Mango DAO, has been under investigation by the US Commodity Futures Trading Commission. On September 27, Mango DAO settled charges with the US Securities and Exchange Commission regarding unregistered securities, agreeing to pay $700,000 and destroy all MNGO tokens.