Key takeaways:
- In the legal proceeding against Ooki DAO, the CFTC is claiming a default judgement.
- The CFTC’s request for a default judgement follows the decentralised autonomous organisation’s failure to reply to the lawsuit by the given deadline.
The CFTC stated in a court filing that Ooki DAO had until January 10, 2023, to reply to the institution’s lawsuit. The federal judge shall now side with the CFTC, the commodities regulator, because the DAO exceeded the deadline.
Ooki DAO, initially called as bZeroX, is a decentralised cryptocurrency lending and borrowing protocol that allows users to expand their trading exposure by using margin trading with loaned funds.
The regulator has asked the court for a “entry of default” against the DAO, based on a court document filed on January 11. The regulator claims the DAO didn’t meet its obligation to “respond or otherwise defend” as required by the subpoena.
If approved, the default entry will demonstrate that Ooki DAO did not show up in court to enter a plea or make a defence. In the future, it will be challenging to reply to or appeal to the lawsuit.
A decision along these lines would implicate the DAO in breaking federal commodities laws.
The document said:
“Pursuant to Rule 12(a)(1)(A)(i), the Ooki DAO’s answer or other responsive pleading to the Complaint was due on or before January 10, 2023. … The Ooki DAO failed to answer or otherwise defend as instructed by the Summons and as provided by the Rules.”
On September 22, 2022, the commission filed legal action against the DAO for offering illegally leveraged and margin commodity trades. When it was revealed that the organisation wasn’t registered as a futures commission merchant with the CFTC, the situation only got worse.
The case may serve as an instructive example for future legal actions against other DAOs, given the potential and workings of DAOs.
The CFTC has been carefully monitoring the cryptocurrency ecosystem in light of the present market situation, which is obscured by the negative effects of the FTX meltdown. The CFTC has actively and properly pursued enforcement cases in the market for digital assets for many years.
