No, DAO Status Will Not Save You From CFTC, New Ruling Says – Crypto News – Crypto News
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No, DAO Status Will Not Save You From CFTC, New Ruling Says No, DAO Status Will Not Save You From CFTC, New Ruling Says

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No, DAO Status Will Not Save You From CFTC, New Ruling Says – Crypto News

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2 years ago

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Vladislav Sopov

US Commodity Futures Trading Commission (CFTC) celebrates Ooki DAO litigation victory; here’s why this is crucial for Web3

Contents

As per a statement shared by the CFTC, the US District Judge treated a decentralized autonomous organization (DAO) as a “person” in a recent ruling. This document is a crucial precedent for Web3 regulatory frameworks in the US

CFTC celebrates victory in Ooki DAO case, imposes six-digit penalty

On June 9, 2023, the US District Judge William H. Orrick ruled that Ooki DAO violated the law by operating an illegal trading platform and acting as a futures commission merchant.

As such, the US court in a precedent-setting decision sided with the CFTC, which sued Ooki DAO and its predecessor bZeroX for crimes against investors.

The defendants should also pay a civil monetary penalty of $643,542. All their websites should be shut down by hosting service providers. Permanent trading and registration bans are also imposed.

CFTC’s Division of Enforcement Director Ian McGinley stressed that this solution is to be of paramount importance for the future of the Web3 segment regulation in the US:

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

During the court hearing, the judge highlighted that a DAO acts as a “person” under the Commodity Exchange Act and should be held liable accordingly.

In Europe, discussion about regulation for DeFi is underway

This is the first court decision that clarifies that the DAO status will not help to circumvent trading and investing regulations.

As covered by U.Today previously, in Europe, industry representatives are trying to exclude decentralized services from Data Act regulations.

As per a public letter signed by Polygon Labs, Ledger and other crypto heavyweights, regulators should not treat smart contracts and systems based on them (DeFis, wallets) as data.

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