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Regulatory Victory Against Ooki DAO
WSJ | Dylan Tokar | Jun 13, 2023
In a landmark ruling, the U.S. Commodity Futures Trading Commission (CFTC) has successfully held the decentralized autonomous organization (DAO), Ooki, accountable under the Commodity Exchange Act who has been ordered to pay a fine of $643,542 and shut down its website and blockchain-based application.
- This marks a significant victory for regulators, establishing a legal precedent for potential future lawsuits against DAOs. However, the challenge lies in enforcing this ruling due to the anonymous and informal organization of DAO members. DAOs, including Ooki, operate on a decentralized finance (DeFi) protocol, which allows control only through a majority vote by members. The identities of these members often remain undisclosed, making it difficult to collect the imposed fine.
See: Court Tests the Liability of DAOs and Their Makers: What You Need to Know
- Ooki DAO's protocol, which allowed users to invest and speculate on virtual currencies, was initially created by a limited liability company, bZeroX. However, the company transferred control to the DAO in August 2021. The CFTC alleged that this transfer was designed to shield the protocol from regulatory oversight.
- The ruling against Ooki DAO is part of a larger regulatory crackdown on the cryptocurrency industry, with the U.S. Securities and Exchange Commission recently launching lawsuits against Binance and Coinbase. With these legal challenges, the crypto industry is becoming increasingly subject to regulatory scrutiny.
Keywords: DAO, Ooki, CFTC, Commodity Exchange Act, DeFi, regulatory crackdown, cryptocurrency industry, Binance, Coinbase
Continue to the full article --> here
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