For the first time in history, the US Commodity Futures Trading Commission (CFTC) has sued a decentralized autonomous organization (DAO) and its token holders.
CFTC Sues A DAO And Its Token Holders For The First Time In The US
The CFTC has announced a $250,000 fine and settlement with bZeroX, LLC and its founders, Kyle Kistner and Tom Bean. The duo led the development of the bZx protocol, a protocol for decentralized lending and other activities.
The bZx protocol came to the fore after the security vulnerabilities it was exposed to in 2020, and it cost hundreds of thousands of dollars. cryptocurrency had caused the loss.
However, the CFTC’s lawsuit today against the Ooki DAO, which was developed to administer the protocol in 2021, could have broader implications.
The lawsuit was filed in the US District Court for the Northern District of California. In its complaint, the CFTC accused the Ooki DAO of using its structure to evade regulatory oversight:
“One of the main goals of bZeroX in transferring control of bZx Protocol (now Ooki Protocol) to bZx DAO (now Ooki DAO) was to try to make bZx DAO sanction-proof thanks to its decentralized nature.
Simply put, the bZx founders believed they had found a way to violate the Laws and Regulations as well as other laws with no consequences.”
“But the bZx founders were wrong, DAOs are not immune from enforcement and cannot break the law with impunity,” the CFTC said. he stressed.
The CFTC defines the Ooki DAO as “an unincorporated entity composed of Ooki Token holders” liable in the lawsuit.
*Not investment advice.
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