- Ooki DAO’s defeat to the CFTC sets a precedent for DAOs in the US
- The CFTC won a summary judgment after Ooki DAO failed to respond to the lawsuit
- The decision means that all DAOs can be charged as entities
Ooki DAO last week lost its case against the Commodity Futures Trading Commission (CFTC) in a result that bodes ill for all other DAOs in the US. The group lost a summary judgment after failing to respond to the charges put against it last year, although amicus briefs filed on Ooki’s behalf argued that DAOs should not be treated as singular entities and that CFTC should instead have to individually identify and summon each member of the DAO. Such a claim was ultimately defeated, which means that DAOs can now be held liable for their actions.
CFTC Said Ooki Could be Served Online
The lawsuit against Ooki DAO was filed on September 22nd last year, with the CFTC alleging that the DAO offered “illegal, off-exchange digital asset trading,” violated registration guidelines and broke provisions of the Bank Secrecy Act. The CFTC argued that, given that DAOs are made up of anonymous or pseudonymous individuals, going after them on a legal front is therefore very challenging and asked for permission to serve the DAO through digital communications, such as in a chat box. This was granted, and a summons was issued to the DAO as a collective shortly afterwards.
Ooki DAO and its members failed to answer the charges or provide a defense, leading to the CFTC asking for summary judgement on January 10. Such a judgement arrived last Friday, with the exchange now ordered to cease doing business in the US or with any entity registered with the CFTC, which could include non-US companies. In addition, Ooki DAO has been ordered to take down its website, preserve documents, and notify the CFTC of any additional website that it controls or oversees. It also has to pay a civil penalty of over $640,000.
Ooki DAO Still Up
CFTC Division of Enforcement Director Ian McGinley noted in a press release that the ruling would shake up the fledgling industry:
The founders created the Ooki DAO with an evasive purpose, and with the explicit goal of operating an illegal trading platform without legal accountability. 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.
As of this morning, the Ooki website is still up and the DAO hasn’t mentioned the CFTC ruling on its social media platforms.