Home CryptocurrencyAltcoin CTFC criticized ‘blatant regulation by enforcement’ over Ooki DAO case

CTFC criticized ‘blatant regulation by enforcement’ over Ooki DAO case

by SuperiorInvest

The Commodities Futures Trading Commission (CFTC) drew strong criticism from the community after it filed a federal civil enforcement action against members of the decentralized autonomous organization Ooki DAO for digital asset trading violations.

On September 22 releaseThe CFTC said it filed and simultaneously settled charges against the founders of decentralized trading platform bZeroX, Tom Bean and Kyle Kistner, for their role in “unlawfully offering leveraged and margined retail commodity transactions in digital assets.”

However, the community created an uproar over a simultaneous civil lawsuit against bZeroX-affiliated Ooki DAO and its members, which allegedly ran the same software protocol as bZeroX after gaining control of it, thereby “violating the same laws.” as respondents.”

The enforcement action has drawn the ire of a number of crypto lawyers and even CFTC commissioners, who fear it will set an unfair regulatory precedent.

In a dissenting statement dated September 22, CFTC Commissioner Summer Mersinger he remarked that while she supports the CFTC’s charges against bZeroX’s founders, the enforcement agency is entering uncharted legal territory when it takes action against DAO members who voted on management proposals.

“I cannot agree with the Commission’s approach of determining liability for DAO token holders based on their participation in governance voting for a number of reasons.”

“This approach constitutes blatant ‘regulation by enforcement’ by establishing policy based on new definitions and standards that the Commission or its staff have never previously formulated or submitted for public comment,” she said.

Jake Chervinsky, a lawyer and head of policy at the US Blockchain Association, said on Twitter that the enforcement action “may be the most egregious example” of regulatory enforcement in cryptocurrency history, drawing comparisons between the US Securities and Exchange Commission and the CTFC. provided that:

“We have long complained that the SEC is abusing this tactic, but the CFTC has shamed them.

DeFi Education Fund as well rang the bell noting that the CFTC’s charges also offer a bleak outlook for people trying to innovate through DAOs.

Related: CFTC Commissioner visits Ripple offices as decision in SEC case looms

“‘Lawmaking through enforcement’ is stifling innovation in the US, and today’s actions will unfortunately further discourage any US person from not only developing, but *merely* participating in The DAO,” it wrote.

The list of charges includes unlawfully offering retail leverage and margin trading; “engaging in activities that only registered futures commission merchants (FCMs) may engage in;” and failing to incorporate a client identification program under the Bank Secrecy Act.

The CTFC also outlined that Bean and Kistner said they wanted to transfer bZeroX through the Ooki DAO as part of a move to avoid crackdowns in the gray area of ​​decentralization.

“By transferring control to the DAO, bZeroX’s founders have offered members of the bZeroX community that operations will be immune from enforcement – ​​allowing the Ooki DAO to violate CEA and CFTC regulations with impunity,” the CFTC said.

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