The U.S. Commodity Futures Trading Commission (CFTC) has won a lawsuit against Ooki DAO. A federal court has ruled that the DAO provided users with unregistered commodities.
The CFTC was granted a default judgement after Judge Orrick ruled that Ooki DAO operated an illegal trading platform and unlawfully acted as an unregistered futures commission merchant (FCM) He ordered the firm to pay $643,542 in penalty, to permanently cease its operations and shut down its website
Unregistered offerings without following KYC norms The original lawsuit, filed recently in 2022, claimed that the DAO offered “leveraged and margined” commodities transactions to retail consumers and did not follow know-your-customer (KYC) norms when serving those traders. CFTC also claimed that Tom Bean and Kyle Kistner, the founders of Ooki DAO’s precursor bZeroX, deliberately intended to transfer control of their non-compliant trading platform to the Ooki DAO. The agency claimed the transfer was done in order to avoid legal repercussions.
CFTC division of enforcement director Ian McGinley said “The founders created the Ooki DAO with an evasive purpose, and with the explicit goal of operating an illegal trading platform without legal accountability.”
Players in the decentralized finance (DeFI) space have long avoided the legal scrutiny faced by their centralized counterparts, but that could be changing. Recently, 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 Securities Exchange Commission (SEC) subpoenaed SushiSwap Head Chef Jared Grey.