Ooki DAO to shut down after ‘precedent setting’ court battle with CFTC

A U.S. District Judge has issued a default judgment ruling that necessitates Decentralized Organization Ooki DAO to cease operations permanently and pay a civil monetary penalty of $643,542.

In September 2022, the Commodity Futures Trading Commission initiated legal action against Ooki DAO, alleging that it was providing retail margin and leverage trading services without authorization and unlawfully operating as a futures commission merchant.

A default judgment had been anticipated for months after Ooki DAO failed to respond to the lawsuit by the January deadline.

On June 9, the CFTC declared the order to be officially in effect and issued a statement regarding the suit, which it called a “sweeping victory” and detailed the full extent of the default judgment.

Ooki DAO has been issued permanent trading and registration prohibitions, and must now close down its website and delete all of its content from the web.

This case involving Ooki DAO was unprecedented, as it was one of the first instances in which a government body had taken legal action against a DAO and its token holders.

Prior to this case, there was a general consensus within the industry that decentralized autonomous organizations (DAOs) and decentralized finance platforms were largely exempt from regulatory oversight due to their decentralized structure.

SEC lawsuits against Binance and Coinbase have brought the crypto industry together.

CFTC has raised a major concern, alleging that Tom Bean and Kyle Kistner, the founders of bZeroX (the predecessor of Ooki DAO), had tried to transfer ownership of their non-conforming trading platform to the Ooki DAO in an effort to avoid any potential legal repercussions.

CFTC division of enforcement director Ian McGinley remarked that the Ooki DAO was established with an elusive intention and the clear objective of running an illicit trading platform without any legal responsibility, saying:

Magazine: Tornado Cash 2.0 – Competing to Create Secure and Legitimate Cryptocurrency Tumblers