CFTC May Sue Ooki DAO
2022.12.13 01:20
CFTC May Sue Ooki DAO
Budrigannews.com – The Commodities Future Trading Commission (CFTC) has been directed by a federal judge in the United States to deliver its lawsuit to the two Ooki DAO founders.
The decentralized trading platform bZeroX, which served as the forerunner to Ooki DAO, was founded by Tom Bean and Kyle Kistner. On December 12, District Judge William Orrick instructed the U.S. regulator to serve them.
Bean and Kistner had already settled charges with the CFTC in September regarding illegal commodities offerings on bZeroX, and Ooki DAO token holders were the subject of separate charges that were served via its online forum and help chat box.
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However, Judge Orrick changed his mind about how the CFTC should serve the lawsuit after learning that Bean and Kistner also owned Ooki DAO tokens.
Judge Orrick wrote, “It seems clear in this case that Ooki DAO has actual notice of the litigation.” However, if at all possible, the CFTC ought to serve at least one identifiable Token Holder in order to provide the best possible notice.
Amicus briefs supporting Ooki DAO argued that the CFTC should locate Ooki DAO members and directly serve them with the lawsuit. The CFTC’s initial approach to filing the lawsuit was met with opposition.
On December 7, the CFTC and the organizations that submitted amicus briefs appeared in the U.S. District Court for the Northern District of California for the purpose of persuading Judge Orrick to reconsider allowing the CFTC to serve Ooki DAO through its help chat box.
Orrick wrote that the CFTC “assumed it knew that some of Ooki DAO’s Token Holders reside and conduct business in the United States because the two founders of Ooki DAO’s predecessor entity, bZeroX LLC, are Token Holders who reside in the United States” at the hearing.
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He continued, “This was brand-new information for me.” The former founders, Bean and Kistner, are not mentioned in either the complaint or the CFTC’s Motion for Alternative Service as Token Holders.
He came to the following conclusion: “The CFTC is now ORDERED to serve Bean and Kistner, in their roles as Ooki DAO Token Holders.”
Bean and Kistner were accused of “illegally offering leveraged and margined retail commodity transactions in digital assets” through bZeroX, which was settled on September 22 by the CFTC. At the same time, the CFTC filed a lawsuit against Ooki DAO, claiming that it operated the same software as bZeroX after it was given to it, in violation of “the same laws as the respondents.”
Even the CFTC was strongly criticized for filing the lawsuit without clear regulatory guidelines, with Summer Mersinger, the CFTC commissioner, describing it as a “regulation by enforcement” strategy.
