A U.S. District Judge has entered a default judgment order that requires Decentralized Organization Ooki DAO to permanently shut down and pay a civil monetary penalty of $643,542.
Haut huet den CFTC's Division of Enforcement Direkter Ian McGinley eng Erklärung iwwer den Ooki DAO Prozess Victoire verëffentlecht. Méi erfueren: https://t.co/MINNeKLeH5
— CFTC (@CFTC) Juni 9, 2023
The Commodity Futures Trading Commission initially filed a lawsuit against Ooki DAO in September 2022, accusing the DAO of illegally offering retail margin and leverage trading services, and “unlawfully acting” as a futures commission merchant.
A default judgment had essentially been on the cards for months after Ooki DAO missed the deadline to respond to the lawsuit in January.
With the order now official as of June 9, the CFTC released a statement on the same day describing the lawsuit as a “sweeping victory” as it outlined the full scope of the default judgment.
Ooki DAO has received “permanent trading and registration bans” and moving forward it has been ordered to shut down the Ooki DAO website and “remove its content from the Internet.”
"Kritesch, an enger prezedenzprägender Entscheedung huet d'Geriicht festgehalen datt den Ooki DAO eng" Persoun" ënner dem Commodity Exchange Act ass an dofir fir Verstouss géint d'Gesetz verantwortlech gemaach ka ginn. D'Geriicht huet dunn festgehalen datt den Ooki DAO tatsächlech d'Gesetz verletzt huet wéi ugeklot.
This case against Ooki DAO was unique as it marked one of the first times a government agency had gone after a DAO and its token holders.
Before this case, there was a belief held amongst the industry that DAOs and decentralized finance platforms were mostly protected from regulatory scrutiny due to their decentralized nature.
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A key issue however, is that CFTC alleged that Tom Bean and Kyle Kistner, the founders of Ooki DAO’s predecessor bZeroX had intentionally attempted to hand over ownership of their non-compliant trading platform to the Ooki DAO to avoid any potential legal pushback.
“The founders created the Ooki DAO with an evasive purpose, and with the explicit goal of operating an illegal trading platform without legal accountability,” noted CFTC division of enforcement director Ian McGinley, adding that:
"Dës Entscheedung sollt als Erwächen fir jiddereen déngen, dee mengt datt se d'Gesetz kënnen ëmgoen andeems se eng DAO-Struktur adoptéieren, fir sech vun der Gesetzesvollzéiung ze isoléieren an schlussendlech de Public a Gefor ze stellen."
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) Juni 9, 2023
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Source: https://cointelegraph.com/news/ooki-dao-to-shut-down-after-precedent-setting-court-battle-with-cftc