- CFTC enforces penalty of $250,000 against bZeroX, LLC and its Founders and Charges Successor Ooki DAO.
- The allegation includes the Illegal offering, Off-exchange digital-asset trading, Registration Violations, and failing to follow the Bank Secrecy Act.
On September 22, 2022 Commodity Futures Trading Commission (CFTC) issued an order along with filing and settling charges against respondent bZeroX, LLC (bZeroX) and its founders Tom Bean (Bean) and Kyle Kistner (Kistner). Additionally, CFTC filed a federal civil enforcement action against Ooki DAO in the U.S. District Court for the Northern District of California.
According to the investigation, on August 23, 2021, bZeroX transferred control of the bZx Protocol to the bZx DAO, which later renamed itself and is currently doing business as the Ooki DAO. The Ooki DAO operates the Ooki Protocol in the exact same manner as bZeroX and hence is continuing to violate the law in the same manner as bZeroX.
CFTC Filings and Orders
As mentioned in the Press Release, Chairman of CFTC, Rostin Behnam, mentioned that “Today’s actions demonstrate the CFTC’s commitment to aggressively pursuing individuals and their operations who purposefully seek to evade regulatory oversight at the expense of retail customers.” Moreover he said “I commend our dedicated enforcement team for pursuing this scheme which touches on many areas of concern regarding this growing market.”
The Acting Director of the Division of Enforcement, Gretchen Lowe also mentioned that “These actions are part of the CFTC’s broader efforts to protect U.S. customers in a rapidly evolving decentralized finance environment. Also, Margined, leveraged, or financed digital asset trading offered to retail U.S. customers must occur on properly registered and regulated exchanges in accordance with all applicable laws and regulations. These requirements apply equally to entities with more traditional business structures as well as to DAOs.”
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