A US federal judge has ordered the Commodities Future Trading Commission (CFTC) to notify the two original founders of decentralized autonomous organization (DAO) Ooki of its lawsuit.
On December 12, the district judge William Orrick ordered the US regulator to notify Tom Bean and Kyle Kistner, founders of decentralized trading platform bZeroX, the predecessor of the DAO Ooki, of the lawsuit.
Bean and Kistner had already settled with the CFTC in September in connection with the illegal offering of goods on bZeroX, while separate charges were filed against DAO Ooki token holders.which was notified using a help chat, as well as a notice on their online forum.
Nevertheless, when Judge Orrick later discovered that Bean and Kistner were also DAO Ooki token holders, he reconsidered how the CFTC should serve the lawsuit.
“It seems clear in this case that DAO Ooki has actual notice of the litigation,” Judge Orrick wrote. “But In order to provide the best practicable notice, the CFTC should notify at least one identifiable token holder if that is possible.”
The CFTC’s original approach to filing the lawsuit received criticism, and cryptocurrency industry participants filed amicus briefs in support of DAO Ooki.who argued that the CFTC should find the DAO Ooki members and notify them directly of the lawsuit.
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 help DAO Ooki through its support chat box.
“At the hearing, The CFTC asserted that it was aware that some of the Ooki DAO token holders reside and conduct business in the United States because the two founders of the Ooki DAO’s predecessor entity, bZeroX LLC, are US-resident token holders. Orrick wrote.
“This was new information for me,” he added. “Neither the lawsuit nor the CFTC’s Motion for Alternative Notice mention that the former founders, [Bean y Kistner]are or have been token holders”.
“The CFTC is now ORDERED to notify Bean and Kistner, in their capacity as holders of DAO Ooki tokens,” he concluded.
On September 22, The CFTC settled charges against Bean and Kistner for “illegally offering leveraged and margined commodity retail transactions in digital assets” through bZeroX.
Simultaneously, filed its lawsuit against DAO Ooki alleging that it operated the same software as bZeroX after it came under its control, which violated “the same laws as the defendants.”
The CFTC was heavily criticized, including by its own people, for filing the lawsuit without clear regulatory guidelines; CFTC Commissioner Summer Mersinger called it a “regulation by execution” approach.
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