A United States federal judge has ordered the Commodities Future Trading Commission (CFTC) to hand over its lawsuit to the two original founders of the decentralized autonomous organization Ooki (DAO).
On December 12, District Judge William Orrick tidy the US regulator to serve Tom Bean and Kyle Kistner, the founders of decentralized trading platform bZeroX, which was the predecessor of Ooki DAO.
Bean and Kistner had already settled charges with the CFTC in September related to illegal commodity offerings on bZeroX, while separate charges were filed against holders of Ooki DAO tokens, which were delivered using a help chat box as well as a notice on their online forum.
However, when Judge Orrick later discovered that Bean and Kistner were also holders of Ooki DAO tokens, he reconsidered how the CFTC was going to pursue the lawsuit.
โIt seems clear in this case that Ooki DAO has actual notice of the litigation,โ Judge Orrick wrote. โBut to provide the best notice possible, the CFTC should notify at least one identifiable token holder if that is possible.โ
The CFTC's original approach to presenting the lawsuit received pushback and crypto industry participants filed amicus briefs in support of the Ooki DAO that argued that the CFTC should find the Ooki DAO members and serve the lawsuit directly on them.
The US District Court for the Northern District of California held a hearing on December 7 with the CFTC and the entities that filed amicus briefs to persuade Judge Orrick to reconsider allowing the CFTC to serve Ooki DAO through from your help chat box.
"At the hearing, the CFTC asserted that it was aware that some of Ooki DAO's token holders reside and conduct business in the United States because the two founders of Ooki DAO's predecessor entity, bZeroX LLC, are token holders residing in the United States," Orrick wrote.
โThis was new information for me,โ he added. โNeither the complaint nor the CFTCโs Alternative Service Motion mention that the former founders, [Bean and Kistner]are or have been Token Holders.โ
"The CFTC is now ORDERED to serve Bean and Kistner, in their roles as holders of Ooki DAO tokens," he concluded.
Related: CFTC Chief Says Bitcoin Is The Only Commodity After FTX Collapse
On September 22, the CFTC settled charges against Bean and Kistner for "illegally offering leveraged and margined retail commodity trading in digital assets" through bZeroX.
Simultaneously, it filed a lawsuit against Ooki DAO alleging that it operated the same software as bZeroX after control was handed over to it, violating "the same laws as defendants."
The CFTC was heavily criticized, including by its own people, for filing the lawsuit without clear regulatory guidelines with CFTC Commissioner Summer Mersinger calling it a "regulation by enforcement" approach.
Post navigation
