Decentralized Autonomous Organization (DAO) lawsuit puts regulator-proof protocols in question

CFTCNovember 08, 2022

Last week, the Commodity Futures Trading Commission (CFTC) brought charges against a blockchain protocol and its founders. The charges have the potential to significantly impact the broader cryptocurrency market, particularly in the USA.
The action seems simple at first glance: two of the founders of the blockchain protocol bZeroX (bZx) and the protocol itself were charged with providing unlicensed, off-exchange tokenized margin trading and lending services. The CFTC's action against bZeroX was fairly routine. However, in a first, they also filed a federal civil enforcement action against Ooki DAO, a decentralized autonomous organization (DAO) they claim was a "successor to bZeroX that operated the same software protocol... [and] violated the same laws" as bZeroX and its founders.
The CFTC's enforcement action against the Ooki DAO is the first of its kind, and cryptocurrency attorneys, including one of the current CFTC commissioners, are worried that it may set a legal standard for DAO regulation and have a substantial effect on the larger crypto business.
We monitor and update about this ongoing case and its potential consequences on the web3.0 market as a whole. This is particularly important because many different other protocols have similar governance structures and could face similar issues in the future.