A district judge in the United States has ordered the permanent shutdown of altcoin project Ooki DAO. He also made a default judgment requiring him to pay a civil fine of $643,542. Here are the details…
The decision to close has come for the altcoin project
The Commodity Futures Trading Commission (CFTC) first filed a lawsuit against the Ooki DAO in September 2022, declaring its decentralized autonomous organization (DAO) to illegally provide retail margin and leverage trading services, and as a futures commission trader, “an illegal operation.” accused of “acting in such a way”. A default decision had been expected for months after the Ooki DAO missed the January 2023 deadline to respond to the lawsuit. As the decision became official on June 9, the CFTC issued a statement on the same day calling the case a “wide-ranging victory” and summarizing the full scope of the default order.
The Commission concluded that the Ooki DAO received “permanent trade and registration bans”; Ooki stated that he was ordered to shut down the DAO website and “remove its content from the Internet.” “Critically, in a precedent-setting decision, the court ruled that Ooki DAO was a ‘person’ under the Commodity Exchange Act and could therefore be held liable for breaches of the law. The court later ruled that the Ooki DAO had indeed violated the law as charged.” With this development, the OOKI token bottomed out in line with the market sentiment. The price change can be seen as above.
Case has significance in cryptocurrency history
This lawsuit against the Ooki DAO was unique in that it was one of the first cases a government agency pursued a DAO and its token holders. Prior to this lawsuit, the prevailing belief among industry players was that DAOs and decentralized financial platforms are mostly protected from regulatory scrutiny due to their decentralized nature.
Here in Ooki, the court found that DAO could be sued as California unincorporated association by CFTC in a federal case because state law applies to these formalities, and under Cali. law, "mutual consent" to form an association can be established by just holding a DAO token (!) pic.twitter.com/OR9fOPh2dT
— ross (@z0r0zzz) June 9, 2023
However, the CFTC’s claim that Ooki DAO’s predecessor, bZeroX’s founders, Tom Bean and Kyle Kistner, are deliberately trying to transfer ownership of non-compliant trading platforms to Ooki DAO to avoid any potential legal backlash is significant. “The founders created the Ooki DAO with the clear goal of operating an illegal trading platform with evasive intent and no legal accountability,” said CFTC executive director Ian McGinley.
This decision should serve as a wake-up call for anyone who believes they can circumvent the law by adopting a DAO structure, seeking to isolate themselves from law enforcement and ultimately putting the public at risk.
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