A United States district judge has ordered Ooki DAO to shut down indefinitely and pay a civil monetary fine of $643,542 due to a default judgment order.
The Commodity Futures Trading Commission (CFTC) initiated the action against Ooki DAO. They accused it of unlawfully acting as a futures commission merchant and providing margin and leverage trading services to consumers.
Ooki DAO failed to respond to the complaint by the January 2023 deadline, leading to the anticipated default judgment. On June 9, the CFTC announced that it had issued the default judgment, describing it as a “sweeping victory” and making it effective immediately.
As part of the judgment, the court has ordered the takedown of the website and the removal of its content from the internet. Additionally, the platform is subject to permanent trading and registration bans.
This case involving the platform is noteworthy. It represents one of the first instances where government entity pursued legal action against a DAO and its token holders.
Before this lawsuit, there was a prevailing belief in the industry. It held that DAOs and decentralized finance platforms were largely exempt from regulatory scrutiny due to their decentralized nature.
CFTC alleged founders of bZeroX, Tom Bean and Kyle Kistner, transferred their non-compliant trading platform to Ooki DAO to evade legal consequences.
However, the CFTC’s Director of Enforcement, Ian McGinley, emphasized a crucial point. The founders had established Ooki DAO with the explicit intention of operating an illegal trading platform without legal accountability.
The court ruling, according to McGinley, should serve as a warning. It should be a warning to anyone attempting to evade the law by adopting a DAO structure, as it puts the public at risk.
