Summary of the Article:
- US district judge ruled in favor of CFTC against Ooki DAO, ordering to pay civil penalty and stop operating in US.
- The court held that Ooki DAO is “a person” and can be held liable when violating the law.
- The ruling has implications for other decentralized autonomous organizations.
Case against Ooki DAO
In late 2022, the US Commodity Futures Trading Commission (CFTC) charged Ooki DAO with operating an illegal trading platform, registration violations and for failing to comply with the Bank Secrecy Act, such as know-your-customer requirements. On Thursday night, Judge William H. Orrick entered a default judgment order which requires Ooki DAO to pay a civil penalty of $643,542, stop operating in the US and ordering it to shut down its website.
Implications of Ruling on Other Decentralized Autonomous Organizations (DAOs)
The ruling has further implications for other decentralized autonomous organizations (DAOs). A DAO is an organization that operates based on rules on a blockchain and then executed through smart contracts. This case was significant since it was first time where CFTC looked into nature of digital asset transactions facilitated by the DAO rather than form of the DAO itself. In March 2021 another similar organization called Sushi DOA faced subpoena from SEC according to Bloomberg Law.
„Wake Up Call“
Ian McGinley, director of the enforcement division at CFTC said that this decision should serve as wake-up call to anyone who believes they can circumvent law by using a DOA structure putting public at risk. He added that this precedent setting decision will bring more clarity about legal status for these types of entities moving forward.
„Know Your Customer“ Requirement
Due to lack of regulatory framework when it comes to cryptocurrencies and blockchain technology there have been many instances where some entities have used these technologies for fraudulent activities without facing any consequences due their anonymous nature. That’s why „know your customer“ requirement is so important because it helps regulators identify suspicious activity before it happens and take appropriate action if needed.
„Conclusion“
The CFTC’s enforcement action against Ooki DOA not only had significant implications on other decentralized autonomous organizations but also served as wake up call for anyone who intends to insulate themselves from law enforcement by adopting a DOA structure in order put public at risk ultimately resulting in better protection from fraudsters utilizing cryptocurrency technology .