CFTC Lawsuit Request Ooki DAO Pay $643,542 Fine And Permanently Closed
- The CFTC has successfully accused the decentralized autonomous organization Ooki DAO of providing unregistered items.
- The ruling ordered the DAO to pay $643,542 in fines, permanently shut down, and shut down the organization’s website.
- The regulator’s victory allows decentralized organizations to face legal consequences for their transactions.
A US federal judge agreed with the CFTC’s allegations that the Ooki DAO issued unregistered items and paid over $600,000 in fines.
This agency has won a legal battle with decentralized organization Ooki DAO for allegedly providing unregistered items, disrupting the industry-wide perception that decentralized financial (DeFi) actors are immune to regulatory scrutiny.
US District Judge William H. Orrick ruled on Thursday that the Ooki DAO operated an illegal trading platform and illegally operated as an unregistered futures commission trader (FCM), which gives the default judgment to the CFTC. He ordered the organization to pay $643,542 in fines, permanently shut it down, and shut down its website. The regulator’s win proves that decentralized entities can face regulatory consequences for their transactions.
The original lawsuit, filed in US District Court for the Northern District of California last September, accused the DAO of providing “leveraged and margin” commodity trading to retail customers and not complying with consumer knowledge laws when serving those merchants.
Ooki DAO, the heir to a company called bZeroX, is accused of allowing Americans to trade illegal crypto derivatives products. In September, the CFTC settled the allegations with bZeroX and its founders, Tom Bean, and Kyle Kistner, and attempted to sue the entire DAO at once. Chatbots and forum messages served the lawsuit.
In January, this agency asked a federal judge to rule that the DAO violated federal commodity law after the DAO missed a deadline to respond to the lawsuit. However, a judge rejected this request.
There are more and more lawsuits against Defi organizations with the involvement of regulators. In March, a California court ruled that the bZx protocol and its token holders should be liable for mining losses that deplete their DAO coffers. And in April, the Securities and Exchange Commission (SEC) subpoenaed SushiSwap Chef Jared Grey.
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