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California

The commodities regulator has begun the process of getting a court ruling on the Ooki DAO case after the latter failed to respond to the lawsuit by the deadline.

The Commodity Futures Trading Commission (CFTC) has begun the process of getting a default judgment in its case against Ooki DAO after the latter missed the deadline to respond to the lawsuit.

According to a Jan. 11 court filing, the regulator has requested the court for an "entry of default" against the decentralized autonomous organization (DAO), stating it had missed the deadline to "answer or otherwise defend" as instructed by the summons.

If approved, the entry of default will establish Ooki DAO has failed to plead or defend itself in court and will no longer be able to answer or respond to the suit.

An "entry of default" is the first step in the process of gaining a default judgment — a ruling handed down by the court when the defendant fails to defend a lawsuit.

The lawsuit in question was filed by the CFTC on Sept. 22, accusing Ooki DAO of illegally offering “leveraged and margined” digital asset commodity transactions to retail traders along with failing to enact a way to identify customers and “engaging in activities only registered futures commission merchants (FCM) can perform.”

The lawsuit was served to the DAO through its help chat box along with a notice on its online forum.

In December, District Judge William Orrick ordered the regulator to serve Tom Bean and Kyle Kistner, the founders of a predecessor trading platform to Ooki DAO, adding the CFTC “should serve at least one identifiable Token Holder if that is possible.”

Bringing forward the lawsuit without clear regulatory guidelines had many criticize the regulator. CFTC commissioner Summer Mersinger even called the action a “regulation by enforcement” approach.

The case could set an interesting precedent for future lawsuits involving DAOs as charges and enforcement will be carried out against an organizational structure with no central body that often includes anonymous members.

In a Dec. 20 court filing, Judge Orrick said Ooki DAO "has the capacity to be sued as an unincorporated association under state law" but said that does not "necessarily establish" the DAO is an association which can be held liable under commodities regulations.

He added those questions can be addressed "later in litigation."

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D’Agostino also said the recent battles between the SEC and CFTC is a good thing for crypto because it indicates that it will be a “vitally important piece of market structure” moving forward.

Institutional adoption of digital assets is “moving very, very fast,” and much faster than the rate nascent industries ordinarily develop at, says Coinbase Senior Advisor John D’Agostino.

In an Oct. 18 interview with SALT moderated by Anthony Scaramucci, D’Agostino said that new asset classes often take time to develop, as “institutional inertia is a very real thing” and “there’s a lot of switching costs associated with adding new assets” but that this hasn’t been the case with crypto.

“So for me, for someone who spent 15 years trying to get commodities to be mainstream, it’s actually moving fast. But I do understand why somebody in the heat of the moment feels it’s glacial. But for institutions I think it’s moving very, very fast.”

As for what may have slowed institutional adoption, D’Agostino said that U.S. regulators have been “complacent” to the point that it harmed “the growth of the technology.”

But interestingly, D’Agostino sees the “bifurcated regulatory regime” between the U.S. Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) “as a good thing” because “nobody fights over something that is going to go away.”

“The fact that crypto is being used as a bargaining chip by the heads of regulatory agencies [and] the fact that these public announcements are being made to push a positioning around which regulatory agency will be in control is an indication that this is a vitally important piece of market structure.”

D'Agostino was adamant that a crypto-related Exchange-Traded Fund (ETF) will eventually be approved, despite the SEC's ongoing rejections.

“I think that’s going to change. Despite the delay, an ETF is inevitable. I can’t tell you when it’s going to happen. But I know at some point it’s going to happen.”

Co-founder and CEO of Singaporean crypto exchange Coinhako Yusho Liu recently told Cointelegraph that he expected institutional interest to keep growing as the industry matures.

"We believe institutional flows into the market will continue to grow and serve as a crucial driver for future crypto innovation and adoption," he said.

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Commodities Futures Trading Commission