When SEC Settlements Collide With Criminal Cases: Lessons From Mango Labs

Dmitriy Smirnov

September 2, 2025

Firm News

The Mango Labs dispute underscores a critical challenge in securities enforcement: what happens when a civil SEC settlement intersects with a parallel DOJ criminal investigation?

Mango Labs settled with the SEC for nearly $700,000 in late 2024. But after the political winds shifted and a related criminal case involving the Mango Markets exploit changed course, Mango sought relief under Rule 60—arguing that enforcement priorities have evolved and past actions are now viewed differently.

The SEC’s reply was straightforward: settlements matter. Mango opted for certainty over litigation; that choice isn’t reversible because policy or prosecutorial tactics change. Courts uphold the finality of these bargains, even amid shifting circumstances.

This tension—between civil settlement and criminal risk—is familiar territory for many facing investigations. Navigating it requires experience, foresight, and keen strategic insight.

Parallel Proceedings: Why They Matter

The SEC and DOJ often function in parallel, yet separately:
– SEC prosecutes civil claims—seeking penalties, injunctions, or reforms.
– DOJ pursues criminal charges—carrying the potential for imprisonment and significantly higher stakes.

For those under scrutiny, this means a settlement with the SEC may feel like resolution—but criminal exposure can remain, regardless of the outcome of the civil matter. The decisions made at the negotiation table can carry lasting consequences on both fronts.

👉 Related reading: What To Do If You Receive an SEC Subpoena

When DOJ Steps In: Common Triggers
Some enforcement matters particularly draw DOJ’s attention. These include:
– Ponzi schemes and affinity frauds — large-scale, deceptive fundraising operations.
– Insider trading — especially high-value or repeat infractions.
– Market manipulation — such as pump-and-dump schemes.
– Crypto exploits and token frauds — including hacks or fraudulent token offerings.
– Accounting fraud — where misstating financials may lead to broader criminal scrutiny.

👉 See also: Understanding SEC Investigations and Enforcement Actions

FAQs: SEC Settlements & Parallel Criminal Cases

Q: If I settle with the SEC, does it protect me from DOJ charges?
A: No. SEC settlements resolve civil liability only. DOJ independently decides whether to pursue criminal charges. Having served as both a DOJ securities fraud prosecutor and a trial attorney at the SEC, I have firsthand experience coordinating cases across both agencies—and training law enforcement on doing the same. That dual perspective allows me to guide clients through these complex intersections more effectively.

Q: Can DOJ use SEC-acquired evidence in its case?
A: Yes. SEC investigative materials can be shared with DOJ, though courts carefully monitor whether civil discovery is being used to bolster criminal cases.

Q: If criminal charges are dropped, can I reopen my SEC settlement?
A: Almost never. Courts treat settlements as final. Rule 60 relief is reserved for extraordinary, often judicial, reconsideration—never simply changes in policy or outcomes in related matters.

Q: Should I coordinate defense between SEC and DOJ matters?
A: Absolutely. The risk of cross-use of admissions, inconsistent strategy, or exposure underscores the need for counsel versed in both arenas.

👉 Related reading: The First Step After Receiving a Government Subpoena

Conclusion: How We Can Help

At Fridman Fels & Soto, we understand the high stakes of SEC enforcement and parallel DOJ investigations. Founding partner Alex Soto brings a rare combination of experience as a former federal prosecutor and senior SEC trial attorney. He has tried over thirty cases and regularly represents clients in complex matters involving the DOJ, OFAC, SEC, CFTC, and FINRA.

If you’re under SEC investigation or facing allegations related to market manipulation, insider trading, or digital assets, you need counsel with experience on both sides of the table. Our team has decades of combined experience handling complex white-collar criminal and regulatory enforcement matters, and we guide clients through every stage of the process—from responding to subpoenas to negotiating settlements and litigating in federal court.

If you’ve received a Wells notice, subpoena, or inquiry from the SEC, contact us today to discuss your case in confidence. Careful planning and coordinated defense strategy can mean the difference between a manageable resolution and years of unintended consequences.

👉 You may also like: What To Expect in an SEC Wells Notice Response