DAOs Aren't People, Crypto Lawyers Tell Court in CFTC's Ooki Case – Yahoo Finance





Decentralized autonomous organizations (DAOs), collectives that typically govern activities by voting through the use of crypto tokens, are not people and should not be treated as such, a group of lawyers and developers told a California court Monday.
LeXpunK Army, a group that received permission to file an amicus – or friend of the court – brief in the ongoing Commodity Futures Trading Commission (CFTC) lawsuit against Ooki DAO, argued that the federal regulatory agency should be required to identify and directly serve any people it believes has violated federal law, rather than the DAO as an entity.
The CFTC alleged that Ooki DAO was an unincorporated association last month, suing it while simultaneously settling charges against bZeroX, the DAO's predecessor centralized company and founders Tom Bean and Kyle Kistner. Last week, CFTC Chair Rostin Behnam described Ooki DAO's behavior – that is, offering the same illicit products bZeroX previously offered without registering or operating a know-your-customer program – as so "egregious" that the agency had no choice but to bring charges.
Still, it's how the CFTC has brought these charges that has attorneys in the crypto industry sounding alarm bells. The agency sought court permission to serve the entire DAO at once by posting the lawsuit on a public forum and through a help bot. Judge William Orrick, of the Northern District of California, briefly approved this move, before responding to two motions for leave to file amicus briefs brought by LeXpunK and the DeFi Education Fund (meaning they asked for permission to join the case). DEF filed its amicus brief alongside its motion to join, which the judge accepted after the fact. LeXpunK had until the end of Monday to file its own amicus brief. Another party, crypto venture fund Paradigm, asked the court to file its own amicus brief earlier on Monday.
In it, the group argues that whether a DAO is an unincorporated association should be interpreted under the Commodity Exchange Act's federal statutes, rather than under any state concerns.
"While the CEA includes an 'association' within in the definition of 'person', … nothing in the statutory text suggests that a DAO is an association," wrote Brown Rudnick attorneys Stephen Palley and Samuel Moniz, and attorney Alex Golubitsky in the brief.
The filing also expresses concern that serving a DAO, which the brief argues should be seen as software, means it may be impossible for anyone to challenge the precedent.
"No person will be able to challenge whether the CFTC’s actions in expanding the definition of 'person' comport with the requirements of the APA [Administrative Procedures Act] if a default judgment is entered in this matter on the CFTC’s behalf," the filing said.
Allowing the default action would allow the CFTC to "effectively" create a rule bypassing the APA, the attorneys argue.
"In short, there is no independent statutory basis to support the CFTC’s assertion that Ooki DAO is a person or an association. Without this authority, service on Ooki DAO cannot be approved by this Court, whether under FCRP 4 or otherwise," the attorneys wrote.
The CFTC does have existing precedent it can point to in bringing a lawsuit against individuals it believes violated the law, the filing said.
"But if the CFTC alleges that individuals it cannot identify are responsible for CEA violations, the solution is to name them as fictitious defendants until such persons can be identified, served with this lawsuit in a manner consistent with FRCP 4, and given an appropriate opportunity to defend themselves. This is the correct method of filing and serving a complaint against unknown individuals," the attorneys said.
The CFTC now has until Nov. 7 to respond to to the DEF and LeXpunK. The amici parties will then have another week to respond to any issues raised by the CFTC before all parties meet in court on Nov. 30 to hash the questions out.
Crypto-related funds are seen both share prices and asset under management plummet, in line with the mayhem of digital assets.
The Japanese government approved amendments to existing financial regulations to prevent money laundering utilizing cryptocurrencies and increase penalties on those involved, according to local media reports. See related article: North Korea’s Lazarus Group attacks Japanese crypto firms, police say Fast facts The Cabinet, Japan’s executive body, approved the revisions to laws associated with the country’s […]
The SEC is investigating Bored Ape Yacht Club creator Yuga Labs for securities violations. Legal experts say it could have a significant impact on the NFT industry.
Renowned voice actor Jennifer Hale, known for her role as Commander Shepard in the Mass Effect series and the new voice of action character Bayonetta, released a statement in response to the discourse following Bayonetta’s former voice actress claiming she wasn’t offered a living wage by PlatinumGames to reprise her role as the Umbran witch.
Independent Utah Senate hopeful Evan McMullin knocked his Republican opponent, Sen. Mike Lee, during a debate on Monday after Lee held up a pocket Constitution. “This document written by the hands of wise men raised up by God to that very purpose — I followed it, I studied it and I defended it to a…
The Special Administrative Region passed a bill that would create a legal framework for accepting digital currency, but would also allow China to monitor Chinese nationals visiting the territory; the largest cryptocurrency by market cap is trading above $19.5K.
Lazarus Group is accused of behind the $625 million Ronin Bridge exploit, blockchain analytics firm Elliptic also traced the $100 million Horizon Bridge hack back to Lazarus in June.
A cabinet decision to revise six foreign exchange laws closely follows a government plan to introduce new rules for remittances, all aimed at tightening anti-money laundering measures for crypto.
This is the first step in a three-part process to introduce an EVM-compatible sidechain to the XRP Ledger mainnet.
Japanese Prime Minister Fumio Kishida donated religious offerings on Monday to a Tokyo shrine viewed by Chinese and Koreans as a symbol of Japanese wartime militarism, though he did not visit it in person. Kishida donated Shinto “masakaki” ornaments for Yasukuni Shrine’s biennial festival, as he has done since becoming prime minister last year. Victims of Japanese aggression during the first half of the 20th century, especially Chinese and Koreans, see the shrine as a symbol of Japanese militarism because it honors convicted war criminals among about 2.5 million war dead.
The federal agencies are looking into whether Three Arrows misled investors about its balance sheet and whether the hedge fund should have registered with them.
The company has teamed with Paxos Trust Co. to provide crypto-asset trading and custody services on behalf of banks.
BIDU vs. GOOG: Which Stock Is the Better Value Option?
Crypto venture capital fund Paradigm Operations has asked a federal court for permission to join two other groups in arguing that the Commodity Futures Trading Commission (CFTC) should serve the members of a decentralized autonomous organization (DAO) directly, rather than through a generic website help portal.
There hasn't been a block mined on the Bitcoin blockchain for more than one hour, leaving thousands of transactions stuck in an unconfirmed state.
The software maker, which earlier said it had plans to cut positions affecting less than 1% of its total workforce, is latest tech company to show signs of concern about future demand.
When a Washington state beauty salon charged Simran Bal $1,900 for training after she quit, she was shocked. Not only was Bal a licensed esthetician with no need for instruction, she argued that the trainings were specific to the shop and low quality. Bal's story mirrors that of dozens of people and advocates in healthcare, trucking, retail and other industries who complained recently to U.S. regulators that some companies charge employees who quit large sums of money for training.
Exxon Mobil says it has left the country after Moscow transferred the energy company’s holding to a Russian entity.
Think price levels will be back to normal soon? Think again.
Microsoft CEO Satya Nadella says that companies that offer hybrid work options have a competitive advantage over rivals.

source



Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.