Crypto Investor a16z Wants to Join Ooki DAO Defense Against CFTC
Venture capital Andreessen Horowitz, known as a16z, is seeking permission from a federal court to argue in favor of the Commodity Futures Trading Commission (CFTC) serving individual members of a decentralized autonomous organization (DAO) instead of targeting the protocol itself in an ongoing lawsuit.
The CFTC must comply with applicable laws in the state of California when serving an unincorporated association, an amicus (or friend of the court) brief filed on Tuesday by a16z said.
The venture capital giant is only the latest entity requesting to join the case against Ooki DAO, in which the CFTC alleges the DAO had violated federal commodities laws by offering illegal leveraged and margin crypto trading products to U.S. residents. In early October, the District Court for the Northern District of California ruled the commodities regulator was allowed to serve the DAO via a website help bot and forum post.
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Since then, District Judge William Orrick has allowed a group of lawyers and software developers called LeXpunK Army and lobby group DeFi Education Fund (DEF) to join the case and argue against the CFTC serving DAO members through a website bot. A few days later, crypto venture capital fund Paradigm Operations also asked the federal court for permission to join Ooki DAO's defense, saying the regulator's attempt to target all of the DAO's voting token holders wholesale "threatens to seriously distort the law."
Miles Jennings, head of decentralization at a16z, tweeted on Thursday that his firm was focusing on an additional point on "why the CFTC should regulate apps, not protocols."
In its amicus brief, a16z argues that the CFTC is currently seeking to do something California law does not allow, which is to "serve a diffuse and unidentified group of individuals alleged to be engaged in unlawful conduct."
Allowing the CFTC to proceed against the DAO in its current course "could imperil an entire industry by chilling participation in decentralized governance or community activity," the brief said.
The CFTC can amend its complaint "to remove the protocol and instead focus on the specific governance votes and illegal actions of individual Ooki DAO members in the operation of the Ooki App (the website)," Jennings tweeted.
The hearing on the brief is scheduled for Nov. 30, 2022.
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