The lawsuit and settlement suggest the use of governance tokens for decision-making in a Defi protocol doesn’t make it immune from enforcement.
The Commodity Futures Trading Commission has filed an enforcement action lawsuit against Ooki DAO, a crypto margin trading and lending platform for engaging in digital asset margin trading that only CFTC-registered Futures Commission Merchants can perform.
Ooki DAO also failed to adhere to customer identification requirements prescribed under the Bank Secrecy Act, the commission furtherCFTC Files Charges Against Ooki DAO “The CFTC seeks restitution, disgorgement, civil monetary penalties, trading and registration bans, and injunctions against further violations of the CEA and CFTC regulations, as charged,” the Commission said in a statement on Thursday.
The CFTC leveled the same charges against Ooki DAO’s predecessor – bZeroX, and disclosed that hadhas struck a $250,000 settlement with bZeroX and its founders, Tom Bean and Kyle Kistner.“A key bZeroX objective in transferring control of the bZx Protocol to the bZx DAO was to attempt to render the bZx DAO, by its decentralized nature, enforcement-proof. Put simply, the bZx founders believed they had identified a way to violate the Act and Regulations, as well as other laws, without consequence.
It’s the first instance when a decentralized autonomous organization has been sued by the Commission. It’s also an indictment of the token holders who participated in the protocol’s governance process.DAOs and said they can prove to be better than traditional corporations and nation-states in serving some market needs.crisis after lending nearly 15000 ETH.
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CFTC Lawsuit Against Ooki DAO, $250,000 Settlement with bZx Creates New PrecedentsThe lawsuit and settlement suggest the use of governance tokens for decision-making in a Defi protocol doesn’t make it immune from enforcement. The lawsuit and settlement suggest that the use of governance tokens for decision-making in a Defi protocol doesn’t make it immune from enforcement.
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