CFTC Took Legal Action Against Decentralized Autonomous Organization

  • The Commodity Future Trading Commission opted legal proceedings against Ooki DAO. 
  • CFTC imposed penalty of over $ 250,000 on bZeroX protocol. 

The Commodity Future Trading Commission(CFTC) has proceeded with legal action against a decentralized autonomous organization(DAO), Ooki, and its members for violating digital trading assets. 

On the 22nd of September Thursday, The Commodity Future Trading Commission (CFTC) disclosed a penalty of $250K on bZeroX, LLC and its creators, Tom Bean and Kyle Kistner.    

bZeroX is a DAO functioning in the field of financial primitive for shorting, leverage, borrowing, and lending that empowers decentralized efficient, rent-free blockchain applications and software. 

Tom Bean and Kyle Kistner are charged for indulging in “illegal offering leveraged and margin retail commodity transactions in digital assets.”   

In 2020 bZx Protocol came into the limelight when it suffered code exploitation which ultimately impacted the Protocol and bZx suffered heavy losses of thousands of dollars with crypto.

The procedure of legal action against Ooki was done under the U.S District Court for the Northern District of California. In the complaint, CFTC blamed the decentralized autonomous organization(DAO) Ooki for using its structure to evade regulatory oversight. 

The CFTC highlighted that “The bZx founders were wrong.” adding more, the agency said, “Decentralized Autonomous Organisations(DAOs) are not immune to enforcement and may not violate the law with impunity.” 

The Commodity Future Trading Commission(CFTC) recognizes Ooki as “an unincorporated association of holders of Ooki Tokens,” answerable in the case.   

The complaint further notes, “The Ooki DAO has never been registered with the commission in any capacity.” The CFTC deeply analyzed the decisions of several governing bodies of the Protocol, including rebranding from bZx DAO and Ooki DAO.   

In a complaint portion, it is mentioned that “During the DAO relevant period, multiple Ooki DAO members have conducted Ooki DAO business(for example, voting Ooki Tokens to govern the Ooki DAO and Operate the Ooki Protocol) from within the united states.  

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