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Ooki DAO Shut Down Following CFTC Victory in Lawsuit

An American judge has issued a ruling against Ooki DAO, the decentralized artificial intelligence organization, following a lawsuit filed by the U.S. Commodity Futures Trading Commission (CFTC). Ooki DAO was found to be operating an illegal trading platform and acting as an unregistered intermediary. The organization was ordered to cease its operations, shut down its website, and pay a financial penalty. This ruling strengthens regulatory oversight over decentralized finance and serves as a warning to individuals exploiting DAO structures to circumvent laws.

In a decisive ruling, a judge in an American county ruled in favor of the U.S. Commodity Futures Trading Commission (CFTC) in a lawsuit against the decentralized artificial intelligence organization Ooki DAO. This ruling marks a significant development that dispels the notion that decentralized finance (DeFi) entities are exempt from regulatory oversight.

On Thursday, Judge William H. Orrick issued a virtual ruling against the Ooki DAO organization, declaring the organization guilty of operating an illegal trading platform and acting as an unregistered futures intermediary. As a result, Ooki DAO was ordered to cease all operations, shut down its website, and pay a civil monetary penalty of $643,542.

The original lawsuit was filed in a Northern California district court in September of last year, accusing Ooki DAO of offering unregistered commodities to retail customers. Additionally, charges were brought against the organization for non-compliance with know-your-customer laws while providing traders engaging in leveraged futures trading.

In January, after Ooki DAO missed the deadline to respond to the lawsuit, the Commodity Futures Trading Commission requested a federal judge to rule that DAO had violated federal commodity laws. Despite the initial denial of the request, the virtual ruling became imminent as Ooki DAO failed to meet the required legal obligations.

The Commodity Futures Trading Commission (CFTC) welcomed the virtual ruling and deemed it a “comprehensive victory,” emphasizing its significant implications for the industry. The ruling clarified that Ooki DAO is considered a “person” under the Commodity Exchange Act, making it liable for law violations. The judge also affirmed that the DAO had indeed violated the charges against it.

One aspect of the lawsuit involved the CFTC’s claims against Tom Bin and Kyle Kistner, founders of the former entity behind Ooki DAO, bZeroX. The Commodity Futures Trading Commission alleged that Bin and Kistner intentionally transferred ownership of their non-compliant platform to Ooki DAO in an attempt to evade legal consequences.

Ian D. McLeod, Executive Director at the Commodity Futures Trading Commission, highlighted the founders’ intentions and noted that they had created Ooki DAO with an explicit goal of operating an illegal trading platform while evading legal accountability. He emphasized that this decision should serve as a warning to those who believe they can bypass the law by adopting a DAO structure, putting the public at risk.

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