CFTC sues Ooki DAO for illegal activity and settles with Ooki’s predecessor bZeroX!

The Commodity Futures Trading Commission (CFTC) issued a press release that “the CFTC filed a federal civil enforcement action in the U.S. District Court for the Northern District of California charging the Ooki DAO—a decentralized autonomous organization [DAO] and successor to bZeroX that operated the same software protocol as bZeroX—with violating the same laws…”  The September 22, 2022 press release entitled  “CFTC Imposes $250,000 Penalty Against bZeroX, LLC and Its Founders and Charges Successor Ooki DAO for Offering Illegal, Off-Exchange Digital-Asset Trading, Registration Violations, and Failing to Comply with Bank Secrecy Act” (https://www.cftc.gov/PressRoom/PressReleases/8590-22) included these statements about the CFTC:

…issued an order simultaneously filing and settling charges against respondent bZeroX, LLC (bZeroX) and its founders Tom Bean (Bean) and Kyle Kistner (Kistner) (collectively, respondents) for illegally offering leveraged and margined retail commodity transactions in digital assets; engaging in activities only registered futures commission merchants (FCM) can perform; and failing to adopt a customer identification program as part of a Bank Secrecy Act compliance program, as required of FCMs.

The respondents engaged in these activities in connection with a decentralized blockchain-based software protocol that functioned similarly to a trading platform. The order requires the respondents to pay a $250,000 civil monetary penalty and to cease and desist from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.

This sends an important message to the DAO community.