Ooki DAO is currently facing the force of futures trading control. The CFTC filed suit against the platform for offering services outside of its authority.
The Commodity Futures Trading Commission stated that Ooki DAO offered margin trading of digital assets, which the law does not allow them to do. This service is operated only by Futures Commission traders registered with the CFTC.
The commission also alleged that the trading and lending platform failed to enforce KYC requirements under the Bank Secrecy Act.
According to records, this action is the first time a DAO has faced a lawsuit from the Commodity Futures Trading Commission.
CFTC and Ooki DAO lawsuit
The CFTC charges against Ooki DAO are numerous. Now, the commission is pushing for restitution, trade and registration bans, and decapitation. In addition, the CTFC is pushing for civil monetary penalties and injunctive relief against any other violations of CFTC and CEA regulations. The CFTC made its position in a statement on September 22.
In addition to this issue with Ooki DAO, CFTC had pressed the exact charges against bZeroX. The platform was the predecessor of Ooki DAO. In this case, the commission reached an agreement with the platform and its founders, Kyle Kistner and Tom Bean.
The settlement reached $250,000. But now, the CFTC believes Ooki is using its structure to avoid regulation. bZerox had transferred its bZx protocol (Ooki protocol) to bZx DAO (Ooki DAO)
According to the CFTC, these moves were made to avoid Acts and Regulations and other laws without facing the consequences.
CFTC Actions and Effects
According to CFTC Director of Enforcement Gretchen, these commission actions were aimed at protecting customers in the United States.
The commission believes that every leverage or margin trading on these platforms for the country’s retail customers should be legitimate. Such transactions must occur only on exchanges that have been duly registered and operate in accordance with regulations and other applicable laws. In addition, all entities, whether DAOs or traditional companies, must meet these requirements.
But Commissioner Summer Mersinger issued a statement against the action, saying it’s not right to arbitrarily judge lawbreakers based on an unfounded legal theory.
Also, following the core principles of DeFi, the CFTC is countering what the industry supports. The CFTC notes that DAOs are the same as traditionally regulated institutions and should face enforcement if they break the law.
But Vitalik Buterin, the co-founder of Ethereum, shared his thoughts on the matter in a blog post on Monday.
Buterin stated that DAOs should not be compared to traditional corporations arguing that DAOs are better at serving the needs of the market. According to Buterin, DAOs make better decisions by voting with smart contracts and also use fair systems.
Featured image from Pixabay, chart from TradingView.com
