CFTC Receives Criticism For Legal Imposition With Ooki DAO

September 23, 2022 - Around 3 mins mins to read

The Commodity Futures Trading Commission (CFTC) sparked strong criticism from the community after it filed a federal civil enforcement action against members of the Ooki DAO decentralized autonomous organization over digital asset trading violations. This action is legally imposed on decentralized organizations and has been compared to the action taken by the SEC.

The Commodity Futures Trading Commission (CFTC) sparked strong criticism from the community after it filed a federal civil enforcement action against members of the Ooki DAO decentralized autonomous organization over digital asset trading violations.

As reported in an earlier Coincu News article, on September 22, the CFTC announced that it had filed and simultaneously resolved allegations of “illegal provision of retail commodity transactions with leverage and margin in digital assets” with bZeroX decentralized trading platform founders Tom Bean and Kyle Kistner. $250,000 is the penalty given. However, the platform has yet to agree to the commission’s allegations.

This was followed by a concurrent civil enforcement action against the affiliated Ooki DAO of bZeroX and its members, which they allege operated the same software protocol as bZeroX after it was approved control and thus “violating the same laws as the respondents. “

Jake Chervinsky, attorney and head of policy at the American Blockchain Association on Twitter said the enforcement action “may be the most egregious example” of regulation by enforcement in the history of cryptocurrencies, and In comparison, the CFTC’s action is similar to the SEC’s criticized action against decentralized institutions.

The CFTC's bZx enforcement action may be the most egregious example of regulation by enforcement in the history of crypto. We've complained at length about the SEC abusing this tactic, but the CFTC has put them to shame. Read Comm'r Mersinger's dissent: https://t.co/0T3l3y79H7
— Jake Chervinsky (@jchervinsky) September 22, 2022

This enforcement action is drawing the ire of some crypto attorneys and even CFTC commissioners out of concern that it will set an unfair regulatory precedent.

The CFTC even faced strong opposition from its own commissioner. Commissioner CFTC Summer Mersinger noted that while she supports the CFTC’s allegations against the founders of bZeroX, enforcement is entering untested legal territory when it comes to taking action against members The DAO voted on the governance proposals.

“I cannot agree with the Commission’s approach of determining liability for DAO token holders based on their participation in governance voting for a number of reasons.”
She noted in a dissenting statement on September 22,

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