US Judge Orders the CFTC To Serve the Original Founders of Ooki DAO With a Lawsuit

United States Judge William Orrick has ordered the Commodity Futures Trading Commission (CFTC) to serve its Ooki DAO lawsuit on Tom Bean and Kyle Kistner, the two original founders of the decentralized trading platform bZeroX protocol, which rebranded to Ooki DAO.

Separate allegations were brought against Ooki DAO token holders, who were served through a help chat box and a notice on an online forum. Bean and Kistner had paid a $250,000 fine to the CFTC for allegedly facilitating leveraged and margined retail commodity trades in digital assets earlier this year as part of a settlement.

Industry participants claimed the CFTC should instead identify the genuine DAO members and serve them personally, despite the regulator’s intention to deliver the lawsuit to the whole DAO at once through posting the suit.

On December 7, the CFTC and those organizations that submitted legal briefs to the U.S. District Court for the Northern District of California attended a hearing to ask Judge Orrick to reconsider permitting the CFTC to serve Ooki DAO through its assistance chat box.

Judge Orrick stated:

“The CFTC’s theory of service and of liability is that Ooki DAO is an entity comprised of Token Holders, who vote their tokens to govern the DAO. At the hearing, the CFTC asserted it knew that some of Ooki DAO’s Token Holders reside and conduct business in the United States because the two founders of Ooki DAO’s predecessor entity, bZeroX LLC, are Token Holders who reside in the United States.”

Since they can be recognized as token holders based in the United States, they will now also be served in the legal proceeding, although the CFTC is unable to determine the whereabouts of other project participants.

Judge Orrick also stated:

“Neither the complaint nor the CFTC’s Motion for Alternative Service mention that the former founders, Tom Bean and Kyle Kistner, are or have been Token Holders.”