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When the gavel struck on June 9, 2023, its sound reverberated throughout the cryptocurrency community. Ooki DAO, a decentralized autonomous organization, suffered a significant loss in a high-stakes lawsuit against the Commodity Futures Trading Commission (CFTC). The judge's ruling determined that, according to the Commodity Exchange Act, Ooki DAO could be classified as a "person." This groundbreaking legal standpoint holds immense implications for the future of DAOs.
With over 12,740 DAOs currently active, collectively overseeing more than $20 billion in crypto assets, the world of cryptocurrency has been abuzz with discussions surrounding the decentralized and autonomous nature of these entities. Many have assumed that DAOs are shielded from legal consequences due to their decentralized structure and shared ownership.
However, the recent legal victory of the CFTC against Ooki DAO has cast doubt upon this prevailing belief. Ooki DAO had been in the CFTC's crosshairs since September 2022, facing allegations of violating the Commodity Exchange Act. The accusations revolved around the DAO's alleged activities as a futures commission merchant (FCM) from June 1, 2019, to August 23, 2021. These activities involved unlawful margined and leveraged retail commodity transactions.
Disregarding the accusations and failing to meet the lawsuit's deadline, Ooki DAO remained silent. This silence sealed their fate, as Judge William H. Orrick declared a default judgment on June 9. The ruling held Ooki DAO accountable for its actions, imposing a civil monetary penalty of $643,542 and designating it as a "person" under the Commodity Exchange Act.
Ian McGinley, Director of the CFTC Division of Enforcement, cautioned that this ruling should serve as a warning to those who believe they can evade the law by hiding behind a DAO structure. McGinley emphasized the importance of this message, particularly given the current state of U.S. regulations in 2023. With numerous industries, from commodities to securities, facing scrutiny, the lines between commodities and securities in the realm of crypto assets have become increasingly blurred.
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