Charges Settled Against bZeroX

Commodity Futures Trading Commission (CFTC) has settled charges against bZeroX, the predecessor of Ooki DAO. Charges were also filed against bZeroX founders Tom Bean and Kyle Kistner for selling leveraged and margin-based retail commodity transactions in digital assets without due approval.

As per the CFTC, bZeroX did not comply with existing regulations and did not conduct transactions on a regulated contract market. Further, The CFTC charged the company for not carrying out identification of its customers. Ooki DAO has been charged with similar offenses in the US.

However, the CFTC commissioner submitted a dissent note against the charges levied on Ooki DAO as they are broad and charge even DAO members and token holders with violations.

As per the CFTC statement, Summer K. Messinger submitted: “I cannot agree with the Commission’s approach of determining liability for DAO token holders based on their participation in governance voting for a number of reasons.”

The SEC Opts for a Different Approach

While the CFTC’s approach was lauded for acting against an unlawful offering of digital assets, the Securities and Exchange Commission (SEC) has been criticized for not doing enough to regulate these new investment instruments.

In an op-ed for the Wall Street Journal last month, SEC Chair Gary Gensler stated:

“There’s no reason to treat the crypto market differently from the rest of the capital markets just because it uses a different technology.”

Cryptocurrency experts have repeatedly pointed out the necessity for new and sympathetic regulations for the broader crypto market, arguing that digital assets represent new technology and existing laws are not enough to regulate the industry. However, the SEC has been carrying out litigation against cryptocurrency companies citing its securities laws.

The latest case in the news is the SEC against Ripple, the company behind XRP Token, one of the most popular cryptocurrencies. A similar case might also be filed against Ethereum after it made the shift to a Proof of Stake consensus mechanism.

The need for better regulations

CFTC commissioner, Caroline D. Pham echoed the sentiment of many cryptocurrency investors at the Messari Mainnet summit stating, “There is room at the table for both the CFTC and the SEC, but regulators need to remember that they are here to serve the people.”

Cryptocurrency experts have suggested a better approach by asking for more regulation rather than opting for enforcement through litigation.

Commissioner Summer K. Messinger suggested a better path saying, “The Commission should communicate to, and engage with, the public in a transparent manner and seek out the input of those with expertise to share.”

The SEC has found it difficult to prove charges against digital asset firms in the past and has instead opted to take the settlement approach after a time-consuming legal process. A similar case against KIK Interactive, the company behind the KIN cryptocurrency, was settled in October 2020. Regulation and better laws that level the playing field for all cryptocurrencies are the need of the hour but who will take the lead?