Ooki DAO to shut down after ‘precedent-setting’ court battle with CFTC

A US District Judge has entered a default judgment order requiring decentralized organization OKi DAO to permanently shut down and pay a civil monetary penalty of $643,542.

Today CFTC Director of Enforcement Ian McGinley released a statement on the Ooki DAO litigation victory. learn more: https://t.co/MInNeKLeH5

— CFTC (@CFTC) June 9, 2023

The Commodity Futures Trading Commission initially filed a lawsuit against Ooki DAO in September 2022, accusing the DAO of illegally offering retail margin and leveraged trading services and “acting unlawfully” as a futures commission merchant. Planted.

A default judgment had essentially been on the cards for months after Ooki DAO missed a deadline to respond to the lawsuit in January.

With Order Now Official By June 9th, CFTC Free A statement the same day described the lawsuit as a “sweeping victory” because it outlined the full scope of the default judgment.

Ooki DAO has received a “permanent trading and registration ban” and has been ordered to shut down the Ooki DAO website and “remove its contents from the Internet” going forward.

“Critically, in a precedent-setting decision, the court held that Ooki DAO is a ‘person’ under the Commodity Exchange Act and as such can be held liable for violations of the law. The court then held that Ooki DAO had actually violated the law as alleged.”

The case against Ooki DAO was unique because it was the first time a government agency had taken action against a DAO and its token holders.

Prior to this case, there was a perception among the industry that DAOs and decentralized finance platforms were mostly safe from regulatory scrutiny due to their decentralized nature.

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However, a key issue is that the CFTC alleged that Tom Bean and Kyle Kistner, the founders of Ooki DAO’s predecessor bZeroX, intentionally attempted to transfer ownership of their non-compliant trading platform to Ooki DAO in order to avoid any potential Legal tussles can be avoided.

“The founders created the Ooki DAO with an ulterior motive, and with the clear goal of operating an illegal trading platform without legal accountability,” said CFTC Division of Enforcement Director Ian McGinley, adding:

“This decision should serve as a wake-up call to those who believe they can circumvent the law by adopting the DAO structure, intending to protect themselves from law enforcement and ultimately put the public at risk.” Are.”

Here in OK, the court found that a DAO can be prosecuted by the CFTC in a federal case as a California unincorporated association because state law applies to these formalities, and under Cali. Law, “mutual consent” to form an association requires only one DAO token (!). pic.twitter.com/OR9fOPh2dT

— Ross (@z0r0zzz) June 9, 2023

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