The Commodities Futures Trading Commission (CFTC) is claiming a significant legal victory in the litigation of Ooki DAO.
According to the CFTC, the decentralized autonomous organization has received a default judgment in which the court held that Ooki DAO is a “person” under the Commodity Exchange Act. This declaration is described as a precedent-setting as it is the first time a court has held a DAO liable for violations of the law as person.
Ooki DAO had been charged with operating an illegal trading platform and serving as an unlawful futures commission merchant.
The entity must pay a civil penalty of $643,542 and is permanently banned from trading as well as any third-party hosting and domain services. The site must be shut down.
“The founders created the Ooki DAO with an evasive purpose, and with the explicit goal of operating an illegal trading platform without legal accountability,” said CFTC Division of Enforcement Director Ian McGinley. “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.”
The CFTC filed this federal civil enforcement action in 2022 concurrently with its issuance of an administrative order against the Ooki DAO’s predecessor LLC (bZeroX) and its founders.
The administrative order and this enforcement action charged that bZeroX (and then the Ooki DAO) unlawfully offered leveraged and margined retail commodity transactions outside of a registered exchange, unlawfully acted as an FCM, and unlawfully failed to comply with Bank Secrecy Act obligations applicable to FCMs. In addition, the administrative order found that bZeroX’s founders were liable as controlling persons of bZeroX and as members of the Ooki DAO for any debts arising from the Ooki DAO’s violations of the law.