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CFTC Wins Lawsuit Against Ooki DAO

CFTC Wins Lawsuit Against Ooki DAO

CoindeskCoindesk2023/06/12 14:56
By:Elizabeth Napolitano

The regulator's victory serves as proof decentralized entities can face legal consequences for their dealings, contrary to popular beliefs.

A federal judge has sided with the U.S. Commodity Futures Trading Commission (CFTC) in a lawsuit alleging decentralized autonomous organization (DAO) Ooki DAO offered unregistered commodities, quashing an industry-wide perception that decentralized finance (DeFi) actors are immune to regulatory scrutiny.

U.S. District Judge William H. Orrick that Ooki DAO operated an illega l trading platform and unlawfully acted as an unregistered futures commission merchant (FCM), granting the . He ordered the organization to pay $643,542 in penalty, to permanently cease its operations and shut down its website.

The original lawsuit, filed in the U.S. District Court for the Northern District of California , alleged the DAO offered "leveraged and margined" commodities transactions to retail customers and neglected to observe know-your-consumer laws while serving those traders.

In January, the CFTC requested a federal judge that the DAO violated federal commodities laws after the DAO missed a deadline to respond to the lawsuit. A judge dismissed the request, however.

While Ooki DAO never formally responded to – or even acknowledged – the lawsuit, it did after the suit was filed.

Players in the decentralized finance (DeFI) space have long evaded the legal scrutiny faced by their centralized counterparts, but that could be changing. In March, a California court ruled bZx protocol and its token-holding community members' were liable for losses resulting from an exploit that drained their DAO's treasury. And, in April, the Head Chef Jared Grey.

Edited by Nikhilesh De.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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