US court admits LeXpunK and DEF in Ooki DAO’s defense against the CFTC

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A California judge has ruled in favor of two digital asset lobby groups that are seeking to join the Commodity Futures Trading Commission’s (CFTC) lawsuit against the Ooki DAO.

The CFTC brought charges against Ooki DAO last month, accusing every member who holds a governance token and has participated in at least one voting exercise of facilitating illegal activities. The DAO has been offering margin trading and lending services without a license and disregarding KYC requirements, and each voting member of the DAO is guilty, the agency’s complaint alleged.

Shortly after, the watchdog served the members through a help chat box on the DAO’s website as well as through an online discussion forum.

As CoinGeek reported, Judge William Orrick ruled two weeks ago that the CFTC was justified in issuing the summons to the DAO members through unorthodox methods as the organization doesn’t have physical headquarters.

Judge Orrick has now ruled in favor of LexpunK and the DeFi Education Fund’s (DEF) motions in which both seek to join the lawsuit as ‘friends of the court.’ The former is a digital asset lawyers and developers group, while the latter is a lobby group.

@LeXpunK_Army has been graciously granted leave to submit an amicus brief in the CFTC v. Ooki DAO case on the issue of the CFTC's methods of service of process.

The Court is also viewing this as a motion for reconsideration of the CFTC's prior motion. pic.twitter.com/pObT50dZUJ

— LeXpunK_Army (@LeXpunK_Army) October 13, 2022

The two attacked the CFTC’s delivery of the summons, which they argued was unconstitutional and should be dismissed by the court.

“Service by posting on a website, without any additional effort, falls far short of what the Constitution requires,” LexpunK claimed in its filing.

DEF went even further in its motion, claiming that the CFTC’s charges lacked merit.

“The issues that the Commission’s actions raise are significant, and allowing the Commission to proceed in the manner it has proposed could chill novel and innovative forms of software development in the United States,” the filing stated.

Update on our brief re: CFTC/Ooki DAO action.

Federal judge accepted our amicus brief + ordered CFTC to respond to our motion to reconsider the judge's ruling that the CFTC's service was valid.

TL;DR, good news.

Next response deadline for CFTC: Nov 7 👀 pic.twitter.com/J5hGPhbqBF

— DeFi Education Fund (@fund_defi) October 13, 2022

The regulator has until November 7 to respond to the amicus curiae filings, with a hearing set for three weeks later to hear the motions.

DEF’s filing to join the lawsuit comes as Ooki DAO members proposed sending a plea to the DeFi world to come to its aid. The members, on the official online forum, argued that the action against them would have far-reaching effects on the entire DeFi industry and that the sector must come together to fight the charges.

Watch: The BSV Global Blockchain Convention panel, Law & Order: Regulatory Compliance for Blockchain & Digital Assets