CFTC Chastised For ‘Blatant Regulation Via Enforcement’

CFTC Chastised For 'Blatant Regulation Via Enforcement'
  • The CFTC’s measures are being strongly opposed by its own commissioner.
  • A lawyer complained at length about the SEC abusing CFTC`S tactic.
  • Reportedly, Ooki DAO violated CEA and CFTC rules with impunity.

After bringing a federal civil enforcement action against members of the decentralized autonomous organization Ooki DAO for digital asset trading violations, the Commodity Futures Trading Commission (CFTC) drew harsh condemnation from the community which was unexpected.

The CFTC announced on September 22 that it had filed and simultaneously resolved charges against Tom Bean and Kyle Kistner, the creators of decentralized trading platform bZeroX, for their participation in “illegally offering leveraged and margined retail commodities trades in digital assets.”

On Twitter, Jake Chervinsky, lawyer and policy director at the US Blockchain Association, said the enforcement action “may be the most egregious example” of regulation by enforcement in the history of crypto, drawing comparisons between the US Securities and the Exchange Commission. 

He mentioned that they have complained at length about the SEC abusing this tactic, but the CFTC has put them to shame.

Among the accusations include illegally selling consumers leverage and margin trading, “engaging in operations only registered futures commission merchants (FCM) can undertake,” and failing to implement a client identification procedure in accordance with the Bank Secrecy Act.

The CTFC also stated that Bean and Kistner indicated a desire to migrate bZeroX over to the Ooki DAO in order to avoid crackdowns in the gray area of decentralization.
bZeroX’s creators boasted to bZeroX community members that by moving power to a DAO, the activities would be enforcement-proof, allowing the Ooki DAO to violate CEA and CFTC rules with impunity.

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Godfrey Mwirigi is an enthusiastic crypto writer with an interest in Bitcoin, blockchain, and technical analysis. With a focus on daily market analysis, his research helps traders and investors alike. His particular interest in digital wallets and blockchain aids his audience in their day-to-day endeavors.

programmer & freelance writer