Wednesday, February 8, 2023
 

Crypto Lawyer Says CFTC’s $250k Fine Against Ooki DAO Was Expected

  • US regulator CFTC filed a civil enforcement action against Ooki DAO.
  • The crypto community reacted, saying the CFTC had overstepped its authority.
  • A blockchain lawyer argued that the CFTC’s action was something they’ve warned about for years.

Last week, the Commodity Futures Trading Commission (CFTC) filed a civil enforcement action against Ooki, a decentralized autonomous organization (DAO), in the US District Court for the Northern District of California.

The crypto community reacted, saying the CFTC had overstepped its authority. However, in a virtual meeting, Matthew Nyman, a blockchain lawyer in London, argued that the CFTC’s action was not farfetched but something they “have been talking about for years.”

The lawyer noted that attorneys had previously warned that DAOs might be construed as partnerships or unincorporated organizations, which was not surprising when the CFTC reaction is considered.

Nyman clarified that for an unincorporated association, each member has limitless responsibility and is responsible for the activities of every other member. But he wonders if it would apply to DAOs.

He, nonetheless, expressed hope that the Ooki would have the resources to defend itself in court to attain a just decision rather than allow the CFTC to set a potentially damaging precedent.

On September 22, the US commodity regulator contended in a press release that bZeroX, Ooki’s predecessor, and its founders illegally offered leveraged and margined retail commodity transactions in digital asset activities, which only registered futures commission merchants (FCM) can perform.

Additionally, the regulator said the company failed to “adopt a customer identification program as part of a Bank Secrecy Act compliance program, as required of FCMs.” By implication, the CFTC imposed a $250,000 penalty on the firm.

Notably, Ooki DAO operated the same software protocol, violating the same laws as the bZeroX.

  • US regulator CFTC filed a civil enforcement action against Ooki DAO.
  • The crypto community reacted, saying the CFTC had overstepped its authority.
  • A blockchain lawyer argued that the CFTC’s action was something they’ve warned about for years.

Last week, the Commodity Futures Trading Commission (CFTC) filed a civil enforcement action against Ooki, a decentralized autonomous organization (DAO), in the US District Court for the Northern District of California.

The crypto community reacted, saying the CFTC had overstepped its authority. However, in a virtual meeting, Matthew Nyman, a blockchain lawyer in London, argued that the CFTC’s action was not farfetched but something they “have been talking about for years.”

The lawyer noted that attorneys had previously warned that DAOs might be construed as partnerships or unincorporated organizations, which was not surprising when the CFTC reaction is considered.

Nyman clarified that for an unincorporated association, each member has limitless responsibility and is responsible for the activities of every other member. But he wonders if it would apply to DAOs.

He, nonetheless, expressed hope that the Ooki would have the resources to defend itself in court to attain a just decision rather than allow the CFTC to set a potentially damaging precedent.

On September 22, the US commodity regulator contended in a press release that bZeroX, Ooki’s predecessor, and its founders illegally offered leveraged and margined retail commodity transactions in digital asset activities, which only registered futures commission merchants (FCM) can perform.

Additionally, the regulator said the company failed to “adopt a customer identification program as part of a Bank Secrecy Act compliance program, as required of FCMs.” By implication, the CFTC imposed a $250,000 penalty on the firm.

Notably, Ooki DAO operated the same software protocol, violating the same laws as the bZeroX.

 

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