Perkins, who is also president of VC CoinFund, published a set of 10 regulatory principles that form the basis of his advocacy role with the CFTC.

Crypto-focused VC CoinFund President Chris Perkins, also an adviser to the Commodities and Futures Trade Commission (CFTC), has published a regulatory white paper, and warned that the U.S. is at risk of falling behind in cryptocurrency.

The U.S. is trapped in the clutches of a reactionary wave of regulation following the collapse of the FTX exchange, while other jurisdictions are now opening to the opportunity and moving ahead, said Perkins, a member of the CFTC’s Global Markets Advisory Committee (GMAC). He noted the re-opening of Hong Kong to crypto and the arrival of MiCA, the European Union’s just-passed crypto assets regulatory framework.

“Other countries are starting to recognize the opportunity and are springing into action,” said Perkins in an interview. “CoinFund just sent a team to Hong Kong,” he continued. “It’s buzzing right now. Government officials are actually going to conferences and encouraging adoption at this point in Hong Kong as they open back up. Meanwhile, MiCA has arrived and the U.K. is springing into action, acknowledging that the Europeans are moving on MiCA.”

The white paper offers policymakers 10 recommendations, including calling for the regulation of centralized intermediaries but not decentralized technology, prioritizing sandboxes and safe harbor programs aligned with SEC Commissioner Hester Peirce’s proposals.

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Federal judge William Orrick said he did not previously know that Tom Bean and Kyle Kistner were current token-holders at Ooki DAO.

A federal judge has ordered the Commodity Futures Trading Commission (CFTC) to serve Tom Bean and Kyle Kistner with its lawsuit against Ooki DAO.

Bean and Kistner are the founders of bZeroX, a company that allowed its users to trade crypto derivatives products in the U.S. Bean and Kistner converted the company into a decentralized autonomous organization (DAO), which eventually rebranded to Ooki DAO.

While the CFTC settled charges with Bean and Kistner, the agency also brought separate charges against Ooki DAO, alleging it conducted similar illegal conduct to bZeroX. Members of the crypto industry tried to push back against the CFTC’s approach however: while the regulator wanted to serve its lawsuit to the entire DAO at once by posting the suit in a help chat bot and on a web forum, industry participants argued the CFTC should identify actual members of the DAO and serve them directly instead.

The U.S. District Court for the Northern District of California held a hearing on the matter last week. While District Judge William Orrick did not make a ruling on that day, on Monday he ordered the CFTC to serve the same suit to Bean and Kistner.

“At the hearing, the CFTC asserted it knew that some of Ooki DAO’s Token Holders reside and conduct business in the United States because the two founders of Ooki DAO’s predecessor entity, bZeroX LLC, are Token Holders who reside in the United States. This was new information to me,” the judge wrote. “Neither the complaint nor the CFTC’s Motion for Alternative Service mention that the former founders, Tom Bean and Kyle Kistner, are or have been Token Holders.”

One of the issues at question is whether the DAO is aware that it has been served with a lawsuit. Orrick, both in comments during last week’s hearing and in Monday’s order, said he believed the DAO is aware, though he did not explicitly say whether he would rule that the CFTC has satisfied all of the arguments it needs to in order to serve the DAO.

“To provide the best practicable notice, the CFTC should serve at least one identifiable Token Holder if that is possible. I will delay entering that order until the CFTC has made that attempt,” Orrick wrote.

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LeXpunK Army and the DeFi Education Fund asked for permission to argue the CFTC could not serve Ooki DAO members through website chat bot.

A federal judge ruled late Wednesday that two groups of crypto advocates could argue that the Commodity Futures Trading Commission (CFTC) should not be able to serve the members of a decentralized autonomous organization (DAO) through a website help bot.

U.S. District Judge William Orrick, of the Northern District of California, ordered that LeXpunK Army, a group of lawyers and software developers, and the DeFi Education Fund (DEF), a lobbyist group, could file Amicus Briefs, or friends of the court briefs. The two groups asked to join the case to argue that the CFTC should identify and directly serve members of Ooki DAO in a lawsuit alleging they violated federal law, rather than serve the DAO itself through a website chat bot.

The CFTC sued Ooki DAO last month, alleging the collective group offered illegal leveraged and margin trading products, as had its predecessor company bZeroX. While the regulator settled the bZeroX charges with the company’s founders, it was unable to identify key figures attached to the DAO, and sought permission to serve it by posting on a forum and a chat bot.

Controversially, the CFTC also alleged that every voting member of the DAO should be held individually liable for the illicit activity.

Earlier this month, Judge Orrick ruled in the CFTC’s favor, the same day LeXpunk filed its motion for leave to file the amicus brief. DEF filed its own motion a few days later. In Wednesday’s ruling, the judge gave LeXpunK until Oct. 17 to file its amicus brief. DeFi Fund filed its own amicus brief alongside its motion for leave.

“Additionally, I interpret these requests as Motions for Reconsideration regarding my decision to permit alternative service in this case,” the judge ruled.

The CFTC has until Nov. 7 to oppose the DEF and LeXpunK filings, while the two groups can respond to the CFTC’s motion within a week after. There will be a hearing on Nov. 30, 2022 to hear the motions.

The ruling throws a lifeline to Ooki DAO, which appears to have geofenced U.S. users, but otherwise had a handful of days left to formally respond to the CFTC.

The post US Judge Allows Crypto Advocates to Join Ooki Defense Against CFTC appeared first on Crypto Insider.

Time is running out for the DAO to respond to court filings in what could be a major test for crypto governance.

Ooki DAO, the first so-called decentralized autonomous organization (DAO) dragged to court over alleged lawbreaking in the U.S., is struggling to muster a response to the Commodity Futures Trading Commission (CFTC) with just days to go before it risks automatically losing its case.

Fear that simply expressing their views could fuel a further legal crackdown may be keeping community members from voting to fund their own legal defense, community members and an observer told CoinDesk. The result: a decentralized crypto governance group whose members are skittish about defending themselves using the tools of crypto governance.

The investor collective’s members (Ooki DAO token owners) are accused of illegally running Ooki Protocol as an unregistered leveraged crypto exchange that does not collect customer data. Ooki is the decentralized successor to bZeroX, LLC, an equivalent centralized exchange whose founders have already settled their equivalent charges with the CFTC.

The CFTC is now trying to hold Ooki’s decentralized management – its DAO token holders – accountable for the platform’s alleged wrongdoing. In late September, it filed a complaint against Ooki token owners who have participated in governing the Ooki Protocol by using their tokens to vote in the DAO.

According to the fluid philosophies of decentralized crypto governance such a lawsuit shouldn’t be possible. When bZeroX’s founders gave Ooki DAO control of their platform in August 2021, they thought that community governance would “future-proof” the protocol from regulators, who wouldn’t know who to sue. The CFTC disagreed and sued the whole community.

Culpability through participation may help explain why Ooki’s latest governance question on the “Future of Ooki DAO” has gotten zero traction. On Monday, a proposal to create a legal defense fund, and to block U.S. users from Ooki failed with zero votes either for or against.

“Probably people are afraid to vote at the moment,” said an Ooki DAO community member who goes by “Frank” on Telegram. “We will proceed with an onchain proposal and see how that goes.”

Their fear may be well-founded. According to attorney Nelson Rosario, who runs a crypto law practice, token holders may fear that by simply voting on Ooki DAO’s response to legal threats, they could get wrapped up in them.

A second go at the vote received three “yes” responses by press time. If that procedural measure passes, Ooki DAO will hold a binding vote on-chain, Frank said.

If it passes the proposal pledges to use Ooki DAO’s treasury for legal fees of “any DAO members named in a complaint,” pursue a crowdfunded legal defense fund to protect other DAOs that catch regulators’ ire and allocate the treasury toward the continued operation of the DAO.

If this process is meant to yield a formal response to the CFTC, then the DAO is running short on time: the court’s deadline is by Friday.

Data website Nansen indicates that Ooki DAO has over $3 million in cash on hand, much of it in native tokens.

“I can assure you the Ooki DAO contributors will continue developing our protocol since we have enough funds available,” Frank said.

The post ‘Fear’ May be Keeping Ooki DAO From Mounting Defense Against CFTC appeared first on Crypto Insider.

Kristin Johnson also suggested her agency might be able to be more responsive than the SEC because it’s smaller.

Kristin Johnson, one of the newest commissioners of the Commodity Futures Trading Commission (CFTC), said that while her agency may be smaller than the Securities and Exchange Commission (SEC), she likes its chances of becoming a primary regulator for the crypto markets.

“What I would suggest in response to arguments that the CFTC is the underdog in some jurisdictional fight is that I like being an underdog,” Johnson said. She spoke during a panel discussion at Crypto Connection, a conference hosted by the TabbFORUM on Tuesday.

“Yes, [the] CFTC is smaller” but that’s why “we might be more capable of being responsive,” she said, responding to a question about whether the CFTC or SEC should have greater regulatory authority over the crypto sector.

Johnson is one of five commissioners on the CFTC, which is chaired by Rostin Behnam.

U.S. senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) recently introduced a wide-reaching crypto legislation bill that many have seen as giving the CFTC greater regulatory oversight than the SEC. But that view has been rejected by Gillibrand.

Gillibrand, speaking on CoinDesk TV’s “First Mover” program last week, said the bill is “clarifying the roles” that the SEC and CFTC have in overseeing crypto, and that the bill sponsors had worked with SEC staff in creating the legislation.

The post CFTC Commissioner: I Like Being an Underdog Versus the SEC appeared first on Crypto Insider.