- The case is proof DAOs are not immune to legal repercussions.
- CFTC accuses Ooki DAO of operating an illegal trading platform.
Commodity Futures Trading Commission (CFTC) has won a case against the decentralized autonomous organization (DAO), Ooki DAO, in a landmark ruling that recognized a DAO as a legal person, a statement released on Friday said.
Furthermore, according to the default judgment issued on June 8 by US District Judge William H. Orrick, Ooki DAO was ordered to pay a civil penalty of $643,542 and banned from trading and registration. The DAO was also ordered to permanently shut down its website and to remove its content from the internet.
For quite a while, Decentralized Autonomous Organizations (DAOs), which refer to blockchain-governed autonomous entities with no central authority, were thought to be immune to legal actions. However, in the precedent-setting decision, the court defined a DAO as a ‘person’ under the Commodity Exchange Act.
Precedent-Setting Decision
“The founders created the Ooki DAO with an evasive purpose and with the explicit goal of operating an illegal trading platform without legal accountability,” commented Ian McGinley, CFTC Division of Enforcement Director. “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.”
CFTC’s actions against Ooki were filed in 2022 with the issuance of separate enforcement actions against Ooki DAO’s affiliated entity bZeroX. The entities were accused of illegally offering leveraged and margined retail commodity transactions. Furthermore, the commission charged the DAO for unlawfully acting as a futures commission merchant (FCM).
An earlier attempt by the Ooki DAO to defend itself fell through when it missed the January deadline to respond to the lawsuit.
