2nd October 2022 > > Ooki DAO.
tl;dr
The Ooki DAO court case, and some potential ramifications.
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Following some interesting discussions this week, I should clear up one point of confusion.
My criticism of the false narrative being spread by newspapers of all political persuasion about the markets is not to be confused with expressing support for Trussonomics. Far from it – the CCC remains as ever fiercely apolitical.
My beef is that the lurid headlines about market turmoil are not backed by facts. It is a perfectly reasonable stance to argue a belief that the mini budget is bad for the economy but using market turmoil to justify that stance has no legs.
It may very well be the case that the economy suffers because of deregulation, tax cuts, and the distant and most unlikely prospect of a resumption of fracking, but it is not correct to assert – as Sir Keir Starmer does today in the Sunday Telegraph – that the “PM has crashed the economy”. You may reasonably believe that to be true, and history may prove you right, but there is yet no hard evidence, and nor will there be for several months.
Now, back to cryptos.
Curious Cryptos’ Commentary – Ooki DAO (Decentralised Autonomous Organisation)
On 28th September 2022, the CCC reported that the CFTC (Commodities Futures Trading Commission) had served a notice on the Ooki DAO which provides unregulated and illegal trading activity for leveraged products on BTC and other cryptos:
The lawsuit has been served against all current and past voting members of the DAO, which includes all owners of the native coin OOKI.
This puts holders of OOKI in a difficult position. As an unincorporated association, every member of Ooki DAO is theoretically liable for the actions of any other member, all of whom have unlimited liability, in stark contrast to equity holders of an incorporated firm.
The price action of OOKI in the last week suggests that this personal, and terrifying risk, though remote, has not yet been recognised in the market:
This will undoubtedly be a long running court case, and legal and regulatory precedents will be established. Clarity is always and forever more a good thing for business development.
But there are further risks, which need to be considered.
Ooki DAO is clearly running an illegal operation and deserves to be brought to heel.
DAOs that are acting legally should be free from this type of litigation risk but none of us are surprised when regulatory agencies conduct land grabs – it is to be hoped that the outcome of this court case is not to effectively outlaw the existence of DAOs.
But there is a further concerning aspect to this situation.
DAOs are forever changing and developing. It could be the case that a DAO operating legally today, engages in illegal activities in the future. Current holders of that DAO’s token may no longer be holders in the future but could potentially be liable for the illegal activities of future holders.
Armed with this knowledge, I am going away now to review in detail all the CCC’s DAO holdings, probably resulting in a recommendation of selling-down some of them. And until there is clarity on this point, the CCC most certainly won’t be taking part in any governance decisions.
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