DAO is no reason to circumvent the law
The U.S. Federal District Court filed a lawsuit against the Ooki DAO (Decentralized Autonomous Organization) on the 8th, with the U.S. Commodity Futures Trading Commission (CFTC) alleging that it illegally offered commodities trading as an unregistered futures trader (FCM). In addition to paying a fine of about 90 million yen ($643,542), it ordered a permanent business suspension and website closure.
The district court ruled in favor of the CFTC because the Ooki DAO never responded to the CFTC’s enforcement action.
This precedent is a decisive precedent in the relationship between decentralized finance and the law, as the court determined that Ooki DAO is a “person” under the Commodity Exchange Act and is therefore responsible for violating the law. The judgment was made.
CFTC Executive Director Ian McGinley commented on the ruling:
The decision is a wake-up call to anyone who thinks adopting the DAO structure will allow them to circumvent the law, intend to distance themselves from law enforcement, and ultimately endanger civilians.
What are DAOs
Refers to a decentralized organization that functions autonomously. Abbreviation for “Decentralized Autonomous Organization”. Unlike general companies, there is no central administrator like a manager. Operation and management is performed by participating members and algorithms.
Background of the lawsuit
In September last year, the CFTC issued a license to the decentralized exchange “bZeroX”, which provided leveraged trading of crypto assets (virtual currencies), its founder, and Ooki DAO, which took over bZeroX’s business, as an FCM. , filed a lawsuit for illegally offering virtual currency commodity trading.
connection:US CFTC sues Ooki DAO for regulatory violations
In addition, bZeroX and its two founders were fined approximately 35 million yen ($250,000) for failing to implement a customer identification program and not complying with the Bank Secrecy Act, which is required of registered businesses. demanded a fine of A settlement agreement was signed at the time of filing the lawsuit.
However, the CFTC has asked Ooki DAO, whose ownership of bZeroX was transferred as part of decentralization in 2021, to stop bZeroX’s business, and will also hold the DAO and its governance token holders accountable for violating regulations. rice field.
The industry has criticized the CFTC for carrying out “legal enforcement” without providing guidelines in advance, and major cryptocurrency-related companies, led by a16z, are members of the DAO rather than the DAO. filed a legal advisory letter arguing that a lawsuit should be filed directly against
As a result, the district court ordered the CFTC to serve the complaint against the two founders of token holder Ooki DAO, but the Ooki DAO set a deadline for enforcement action without answering or defending the lawsuit. welcomed
After the Ooki DAO failed to formally respond by the due date, the CFTC sought a federal district court ruling of violations of the Commodity Exchange Act, but at that time the judge denied the request.
connection:US CFTC overturns litigation process against OokiDAO