Ooki DAO loses to CFTC after refusal to contest case 

The CFTC filed its suit against Ooki DAO in federal court in California last September, alleging the DAO was operating an illegal trading platform. Ooki decided not to fight the case.

article-image

Midjourney modified by Blockworks

share

DeFi margin trading platform Ooki DAO lost its suit with the CFTC earlier this month after opting to not fight back. The default judgment has limited power to establish precedent, but other DAOs and their members should still take note, legal experts say. 

The CFTC won its case against Ooki DAO in a June 8 default judgment. The court moved ahead with a default judgment because Ooki DAO refused to offer any defense or plea. 

“Appearing before the court to defend Ooki DAO would establish someone as a member of the DAO, which might imbue that person with personal liability for the DAO’s activities,” Jason Civalleri product counsel at Grayscale, said. “Apparently the DAO’s members did not want to take on this risk.” 

The CFTC filed its suit against Ooki DAO in federal court in California last September, alleging the DAO was operating an illegal trading platform by offering “leveraged and margined” commodities. 

As part of the default judgment, Ooki DAO has been ordered to cease all operations and pay a $643,542 penalty. Other DAOs should consider the outcome and the CFTC’s case against Ooki, Civalleri said. 

“The case only establishes limited precedent because it is a default judgment, but the court’s reasoning is sound,” Civalleri said. “It’s an important reminder for DAOs and their members that just because they are acting within a DAO framework does not mean legal liability cannot apply to them.”

The judgment issued this week does not hold any of Ooki’s members personally liable, but Civalleri said that the CFTC could opt to potentially charge individuals in the future. 

Typically, the structure of LLCs and similar entities mean the company’s owners and investors are not personally responsible for fees and penalties imposed on the company. 

But that’s not usually the case when it comes to DAOs, Civalleri said. 

“An individual might not recognize that participation in a DAO (possibly even by simply holding a DAO’s token) might make them personally liable if that DAO does something illegal – unless that DAO has properly registered as an entity with limited liability,” Civalleri said. “All investors should consider this risk when joining a DAO or holding DAO tokens.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template.png

Research

The march toward an interoperable and onchain-by-default internet depends on reliable messaging and value transfer across heterogeneous domains. Crosschain protocols now process >$1.3T in combined annual transfer volume and secure tens of millions of user interactions, yet no single design dominates.

article-image

The goal, per Santiago Santos, is to make crypto a relatable piece of tech for people who may not even understand it

article-image

Stripe stablecoin unit aims to operate under a federal charter enabling regulated stablecoin issuance and custody services

by Blockworks /
article-image

Will TradFi make crypto better or create more problems than it solves?

article-image

Subtle decisions by risk curators saved Aave from significant turmoil

article-image

The new Rootstock Institutional unit aims to connect professional investors to Bitcoin-native yield and liquidity strategies anchored in BTC’s security layer

by Blockworks /
article-image

DOJ files record civil forfeiture against more than 127,000 BTC linked to scam activity

by Blockworks /