A United States district judge has issued a default judgment order that says Ooki DAO must shut down permanently. Moreover it has to pay a $643,542 civil money penalty.
The Commodity Futures Trading Commission (CFTC) has noted that “critically, in a precedent-setting decision, the court held that the Ooki DAO is a ‘person’ under the Commodity Exchange Act.”
Today the CFTC’s Division of Enforcement Director Ian McGinley released a statement on the Ooki DAO litigation victory. Learn more: https://t.co/MInNeKLeH5
— CFTC (@CFTC) June 9, 2023
The CFTC first sued Ooki DAO in September 2022, saying that the decentralized autonomous organization was “unlawfully acting” as a futures commission merchant and selling retail margin and leverage trading services.
Months of anticipation had led to an expected default judgment. Especially, after Ooki DAO failed to meet the January 2023 deadline to respond to the lawsuit. Now, as of June 9, when the order became official, the CFTC issued a statement describing the lawsuit as a “sweeping victory” and detailing the entire scope of the default judgment.
The commission said that Ooki DAO has been given “permanent trading and registration bans.” It has also been told to shut down the Ooki DAO website and “remove its content from the Internet.”
Moreover, the commission added, “Critically, in a precedent-setting decision, the court held that the Ooki DAO is a ‘person’ under the Commodity Exchange Act and thus can be held liable for violations of the law. The court then held that the Ooki DAO did, in fact, violate the law as charged.”
This case against Ooki DAO was one of the first times a government body went after a Decentralized Autonomous Organization. Including, the people who owned tokens in it. Before this case, the majority of people in the industry believed that the decentralized nature of DAOs and decentralized finance platforms would protect them from regulatory scrutiny.
The CFTC accused Tom Bean and Kyle Kistner, the founders of Ooki DAO’s predecessor, bZeroX. Accusers alleged that they attempted to provide Ooki DAO with access to their illegal trading platform in an effort to evade legal consequences. This was a key problem, so McGinley, the CFTC division of enforcement director, 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.”
Moreover, he said, “This decision should serve as a wake-up call to anyone who believes they can circumvent the law by adopting a DAO structure, intending to insulate themselves from law enforcement and ultimately putting the public at risk.”
And, that a DAO and its members can be summoned to court by just posting on its forum, as discussed in an earlier order, https://t.co/wPEwjkEjLz
The matter of “how do we notify you of court case” is very much tied into understanding what kind of legal entity a DAO is … pic.twitter.com/rGil72XqEe
— ross (@z0r0zzz) June 9, 2023