Future of Ooki DAO

On September 22, 2022 the CFTC published on their website an announcement that a civil complaint was filed against Ooki DAO alleging Ooki DAO voting members violated provisions of the Commodities Exchange Act (CEA) in connection with developing a decentralized margin trading blockchain protocol and failing to utilize KYC for platform participation as required by CEA regulations.

This Ooki DAO forum post is geared towards beginning discussion among DAO community members as to the appropriate response to the CFTC complaint. Potential actions could include any of the following:

  • Ooki DAO voting to approve allocating Ooki treasury funds to be spent to retain legal counsel to represent Ooki DAO members.
  • Ooki DAO voting to approve allocation of Ooki treasury funds for the DAO to continue operating and any future contingency runway.
  • Ooki DAO voting to approve submitting a legal defense fund grant request on Gitcoin for members of the broader blockchain and DeFi community to support the legal defense of Ooki DAO.
  • Ooki DAO voting to approve releasing an NFT to support Ooki DAO legal defense.

Based on the theory articulated in the CFTC complaint, all DAO token holders could be found liable for any alleged wrongdoing based on DAO voting participation. As a result of this, the outcome of the Ooki DAO CFTC case could serve as precedent for other DAO’s in the cryptocurrency space and have far reaching implications for the entire cryptocurrency space as it pertains to liability of DAO voting members.

Among DAO’s offering DeFi services such as trading, margin and lending Aave DAO, Compound DAO, Abracadabra DAO, Sushi DAO, Kyber DAO, Lido DAO, Uniswap DAO, Gitcoin DAO, and countless others would all be impacted by this litigation as the CFTC alleges that all DAO voting members are individually liable for voting in DAO’s.

Because of the impact the legal matter between Ooki DAO and the CFTC may have on the cryptocurrency industry, some have stated that it is important Ooki DAO receive donations to support legal defense and legal support from the cryptocurrency community. Insofar as all DAO’s have a stake in the outcome, broad community support of Ooki DAO’s legal defense is critical.

Following the announcement of the CFTC complaint, various cryptocurrency publications, twitter commentators, and legal blockchain associations have expressed concern with the CFTC’s approach alleging “regulation by enforcement”. Some twitter commentators speculated that “They’re [regulators] targeting smaller players with fewer resources to establish favorable precedents.”

This concern was echoed in the CFTC’s dissent. Among CFTC chair members, there are also dissenting viewpoints of optimal paths forward in relation to DAO token holder liability. Some insight into this were provided in the recent dissenting statement of Commissioner Summer K. Mersinger:

“We cannot arbitrarily decide who is accountable for those violations based on an unsupported legal theory amounting to regulation by enforcement while federal and state policy is developing… I cannot agree with the Commission’s approach of determining liability for DAO token holders based on their participation in governance voting…Although there are no allegations of any fraud having occurred here, we all are mindful of the need to protect customers who are participating in the largely unregulated crypto space. But those good intentions do not entitle the Commission to act through enforcement without proper legal authority, notice, or public input.”

There is still time to help shape the future of DeFi regulation. Let’s come together and decide the next course of action.

1 Like

My thoughts, we should do all of the above. All of it.

-Vote to approve allocating funds to provide OokiDAO members legal counsel.
-Vote to approve allocating funds to continue our operations.
-Vote to approve submitting a legal defense fund grant request on Gitcoin to get support for our legal defense from the entire DeFi space out there.
-Vote to approve releasing an NFT to support the OokiDAO legal defense.

I also would like to reach out to the other DAO’s out there providing DeFi services such as trading, margin trading and lending like the DAO’s pointed out in the article above.

I think once we have structured our defenses, we definitely need to reach out to the other DeFi platforms to join forces.

They are targeting us now, the little guy, thats Ooki. But this is just the beginning, so lets do something about it, together.

I think the most important thing right now is publicity. lets get this link posted everywhere so that general crypto community get involved. Please post on twitter and tag relevant people.

Second I agree with all 4 points:

  1. create vote allocate treasury
  2. allocate funds for contingency
  3. build a legal defense budget
  4. NFT

Hello Guys,

I am rasit from Analybits.xyz
We are a global blockchain legal services firm. I would like to offer legal support to the Dao.
We have very strong legal and blockchain experience, and we believe we can contribute a lot to legal incidents right now the dao face.
We can either can manage and build the DAO legal strategy or/also can prepare the defense or can prepare the legal expert witness report.
for a recent research, you can check (analybits.xyz/tornado)

Which other references do you and your team have?

Portfolio companies’ valuation is a couple of billion$. Due to respect, l don’t like exposing their name and how we contributed a lot since the disputes were handled privately. We assisted a lot of projects, from top 10 cmc to small caps. Some of them took our advice; some did not, and some did not take any legal advice at all.
For example, I have some concerns for the future of Ooki Dao too, but I don’t write here since third parties can consider a weak spot and take action against the dao if my worries are correct.

I think we should reach to Morrison Cohen, if I am not mistaken they help bZeroX to reach settlement and they most probably have the deepest knowledge of the case.

looks like this is him Jason P. Gottlieb | Morrison Cohen LLP

I agree with all of the above suggestions and will support all later ideas that try to help ooki in particular and defi in general.

Also, if there is a usdt or busd address created so that the community can easily transfer funds to support ooki that would be great. Many a little makes a mickle; Together we can change the world. I believe so.

Won’t it be a conflict of interest?
They helped one of the parties, and they settled. Do you know the details of the talks and settlement?