US Judge Allows Crypto Advocates to Join Ooki Defense Against CFTC

LeXpunK Army and the DeFi Education Fund asked for permission to argue the CFTC could not serve Ooki DAO members through website chat bot.

AccessTimeIconOct 13, 2022 at 1:18 a.m. UTC
Updated Oct 13, 2022 at 8:48 p.m. UTC

A federal judge ruled late Wednesday that two groups of crypto advocates could argue that the Commodity Futures Trading Commission (CFTC) should not be able to serve the members of a decentralized autonomous organization (DAO) through a website help bot.

U.S. District Judge William Orrick, of the Northern District of California, ordered that LeXpunK Army, a group of lawyers and software developers, and the DeFi Education Fund (DEF), a lobbyist group, could file amicus, or friend of the court, briefs. The two groups asked to join the case to argue the CFTC should identify and directly serve members of Ooki DAO in a lawsuit alleging they violated federal law, rather than serve the DAO itself through a website chat bot.

The CFTC sued Ooki DAO last month, alleging the collective group offered illegal leveraged and margin trading products, as had its predecessor company bZeroX. While the regulator settled the bZeroX charges with the company's founders, it was unable to identify key figures attached to the DAO, and sought permission to serve it by posting on a forum and a chat bot. Controversially, the CFTC also alleged that every voting member of the DAO should be held individually liable for the illicit activity.

Earlier this month, Judge Orrick ruled in the CFTC's favor, the same day LeXpunk filed its motion for leave to file the amicus brief. DEF filed its own motion a few days later. In Wednesday's ruling, the judge gave LeXpunK until Oct. 17 to file its amicus brief. DeFi Fund filed its own amicus brief alongside its motion for leave.

"Additionally, I interpret these requests as Motions for Reconsideration regarding my decision to permit alternative service in this case," the judge ruled.

The CFTC has until Nov. 7 to oppose the DEF and LeXpunK filings, while the two groups can respond to the CFTC's motion within a week after. There will be a hearing on Nov. 30 to hear the motions.

The ruling throws a lifeline to Ooki DAO, which appears to have geofenced U.S. users, but otherwise had a handful of days left to formally respond to the CFTC.


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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.