The Commodity Futures Trading Commission has fined protocol bZeroX $250,000 for several violations. It has also laid the same charges against the successor to bZeroX, Ooki DAO.
The Commodity Futures Trading Commission (CFTC) has fined blockchain protocol bZeroX $250,000, according to a press release published on Sept. 22. The penalty was levied against the company and its founders Tom Bean (Bean) and Kyle Kistner (Kistner).
Specifically, the fine was made for a variety of violations. The press release reads,
“…illegally offering leveraged and margined retail commodity transactions in digital assets; engaging in activities only registered futures commission merchants (FCM) can perform; and failing to adopt a customer identification program as part of a Bank Secrecy Act compliance program, as required of FCMs.”
However, one interesting development is the fact that Commissioner Summer Mersinger did not agree with the action of the CFTC. She said,
“We cannot arbitrarily decide who is accountable for those violations based on an unsupported legal theory amounting to regulation by enforcement while federal and state policy is developing.”
bZeroX successor also facing CFTC wrath
The CFTC also filed action against Ooki DAO, which is the successor to bZeroX. It claims that the successor violated the same laws. However, what’s interesting about the case against Ooki DAO is the fact that the CFTC is taking on a decentralized organization.
Analysts on Twitter have taken to talk about the overreach of the CFTC, saying that participating members of the DAO were also responsible for the violations. Naturally, there was a lot of uproar about this. Commissioner Mersginer also noted that individual DAO should not be responsible for the violations.
Community outraged
A range of people has come out on Twitter saying that the CFTC’s actions have been far too harsh. Blockchain Association’s Head of Policy Jake Chervinsky called the enforcement action “may be the most egregious example of regulation by enforcement in the history of crypto.”
The Defiant’s Camila Russo also lambasted the CFTC, saying that the case was concerning. Meanwhile, prominent crypto community member and Yearn developer Artem (aka Banteg) noted that this seemed like a tussle between agencies in the U.S. trying to gain control over the space.
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