The End Of The Wild West For Decentralized Crypto Trading
The founders of certain U.S.-based DAOs offering trading services hoped to avoid the wrath of regulators on the warpath with the DAO loophole. The trick was to remove all identifiable people and addresses and give up decision-making power to the user community. The founders would be obliged to stand in the shadows, collecting fees.
NOT SO FAST! The case of Ooki DAO (Ooki) definitively shut down hopes that they could avoid legal and regulatory exposure, setting various notable precedents.
Wulf A. Kaal, an economist and law professor at the University of St. Thomas, said in a call with #DisruptionBanking, that Ooki’s mistake was not having a “legal wrapper.”
“[The founders of Ooki] had a nebulous understanding of what DAO means. Of course, that’s the risk you take, especially if it’s a finance-related DAO.” He added,“I wouldn’t touch a DAOin the US without a legal wrapper. There are free trade zones and city-states offering — to create legal environments for DAOs. No one I know would do anything in the US.”
The path for Web3 is filled w uncertainty, and recent cases of the Mango Markets hack, Hector Network, and Parrot Protocol, illustrate how ultra-democratic DAO governance structures can deliver decisions that are unpopular w user community.
The question remains if the ruling is specific to the circumstances of Ooki, whose founders left no doubt about their intentions, or if the case is a harbinger of things to come in the DAO ecosystem.