- Mango Labs has sued two members of its DAO for embezzling $10 million
- The DAO members are accused of using dubious means to accumulate the amount
- The two hold influential positions on the DAO
Mango Labs, the developers of DeFi platform Mango Markets, has sued two influential members of the Mango DAO for embezzling $10 million. The two, Maximilian Schneider and John Kramer, were to buy the DeFi project’s native token, MNGO, from the defunct FTX exchange on behalf of the DAO to prevent their use by malicious actors. They instead secretly bought 330 million tokens and used them to influence the voting on a proposal linked to the tokens, a scenario that reveals the shortcomings of a decentralized autonomous organization.
Breaching Fiduciary Duty
According to the lawsuit, Mango Labs accused the two of “breach of fiduciary duty […] fraud, and unjust enrichment.” After secretly purchasing MNGO, they proposed that members should sell their tokens to the DAO at a higher price.
The proposal passed after the duo used their stash to influence the outcome, forcing the DAO to pay millions of dollars for the tokens. Mango Labs revealed that they’ve tried to confront Schneider and Kramer over their behavior but have been met with resistance.
Mango Labs said that the duo’s actions harmed “the Mango DAO and all Mango DAO members […],” blocked the DAO from directly purchasing the tokens from FTX, and caused Mango Labs to incur extra monetary costs in uncovering “the full extent of defendants deceit and to pursue this action.”
Mango Labs Wants Damages Paid
The Mango Market creators want the court to order the defenders to pay for damages, attorneys’ fees “and any other or additional relief deemed just and proper.”
The lawsuit comes two months after Mango Markets exploiter Avraham Eisenberg asked the court to dismiss his case or try him afresh.
With Schneider and Kramer’s actions easily detectable, it’s to be seen how the court will handle the case.
