Part of the US Government, the CFTC has started a lawsuit against DAO Ooki, on various charges, which has led investors to sell their holdings on the market and the cryptocurrency linked to the project has melted in the last 24 hours. DAOs are decentralized autonomous organizations that have a community involved in pursuing a common goal. In a recent case, a DAO proposed to buy the bankrupt Blockbuster, so investors rallied around that purpose and put money into the project. But these new forms of financial organization are under the watchful eye of governments, which must not leave them as free as they hope.
US Government Sues Ooki DAO and Project Cryptocurrency Melts
The Commodity Futures Trading Commission (CFTC) has a mission within the US Government to ensure the efficiency of the derivatives market. In this way, last Thursday (22), the commission issued an order against the business of the company bZeroX and its founders Tom Bean and Kyle Kistner, who would be illegally offering transactions of commodities leveraged with cryptocurrencies, in addition to not carrying out the KYC of your customers. Both will have to pay a fine of $250,000 each and immediately cease trading, according to the CFTC. Simultaneously with this order, the US Government body sued a DAO and caused a drop in the price of its currency, which melts 4% in the last 24 hours. In the last 30 days, the accumulated loss exceeds 30%. According to the authorities, Ooki DAO is a successor to bZeroX, which used the same protocol as its basis. Thus, the CFTC wants to penalize the bill and end any violations that this DAO has committed against US law.
“Simultaneously, the CFTC filed a federal civil enforcement action in the U.S. District Court for the Northern District of California accusing the Ooki DAO – a decentralized autonomous organization and successor to bZeroX that operated the same software protocol as bZeroX – of violating the same laws as the respondent. The CFTC seeks restitution, return, civil monetary penalties, trade and registration bans, and injunctions against other violations of CEA and CFTC regulations, as charged.”
“We want to protect customers from decentralized projects”
For the acting director of application, Gretchen Lowe, the actions against the Ooki DAO show that the US Government is committed to protecting investors in decentralized environments. According to her, leveraged and margined operations should only be carried out on regulated exchanges, not on any platform.
“These actions are part of the CFTC’s broader efforts to protect US clients in a rapidly evolving decentralized financial environment. Margined, leveraged or funded digital asset trading offered to US retail customers must take place on exchanges that are properly registered and regulated in accordance with all applicable laws and regulations. These requirements apply equally to entities with more traditional business structures as well as DAOs.”
In addition to the DAO cryptocurrency melting, what drew the attention of experts to the case is that the project’s TVL has already dropped 98% since the maximum deposits in the project.
#PeckShieldAlert CFTC Imposes $250k Penalty Against bZeroX, LLC & its successor @OokiTrade
Ooki currently has 777k TVL, which has dropped -98% between September 15 and September 18
~35.24M $USD outflow of the Ooki protocol on September 18https://t.co/zhZtGxdm3q pic.twitter.com/SxhRRd0pdV
— PeckShieldAlert (@PeckShieldAlert) September 23, 2022
