[Short #113] DAOs vs. CFTC, Decentralized Twitter

PLUS: 📺 Am I famous? I'm on a podcast episode

DAO Regulation pt. 2

In yesterday’s piece, I wrote about an attorney that’s drafting corporate code for DAOs.

This is going to be important as regulatory bodies are going after DAOs. Specifically, the CFTC (think of it as a sibling to the SEC) is going after OokiDAO.

Cope @Timccopeland

THE CFTC IS GOING AFTER DAOS — HOW DOES THIS AFFECT YOU? Big questions: - What is happening? - How will it affect DAOs? - How does it affect token holders? + Ooki’s legal defense will be really important for the entire DAO space. Let's take a look 👀 🧵 1/26

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10:22 AM ∙ Sep 29, 2022


164Likes64Retweets

TLDR of Cope’s thread:

  • The CFTC (Commodity Futures Trading Commission) is going after the DAO for running an unregistered futures exchange. Specifically they’re going after the members of the DAO, not just the founders

  • They’re going to court to make the case that Token holders of the DAO are also liable. Nothing is for sure yet.

  • How does the CFTC define the members of the DAO? Token holders who have voted on a governance decision at least once.

  • Potential penalties: Stop members from trading and offering related services, pay back profits, making investors whole, and pay penalties.

  • What is Ooki DAO considering to defend itself? Using treasury funds or raising money through funding platforms or NFTs.

  • The decisions coming from this case will set a precedent for the future of DAOs. If the CFTC is successful with this case, it will likely go after larger DAOs that operate in a similar fashion.

TPan, I am in a DAO and I voted on something. Am I going to jail?

No…or at least not yet? (honestly, no idea) This case will go through the courts, but the precedent it sets for all parties will be a big deal.

The CFTC is focused on financial markets, so this is an opening salvo on DAOs in DeFi (decentralized finance) focused on building financial tools.

Similar to any enforcement, it’s impossible for regulatory bodies to go after every infringing party. They are looking draw the proverbial line in the sand for what is and isn’t ok though.

The other interesting thing was how the CFTC ‘served’ Ooki DAO. Serving is the process where the defendant is notified of legal action taken against them. This is usually done via mail or in-person.

For example, actress Olivia Wilde was served onstage at a conference.

Source

The CFTC served the DAO by notifying them in their online forum. There’s a spicy response, but I’ll let you click on the link yourself 😉

SHEESH. What’s next, the SEC joins a Discord server and serves everyone in the Discord with a “@everyone”? The CFTC tweets at a DAO to notify them that there is a case filed against them?

Ok I’m getting carried away, but these were edge cases that are now becoming reality.

I get both sides here…but I hope that there will be a reasonable take on enforcement and regulation. DAOs are an innovative approach in organizational and governance structures, we shouldn’t throw the baby out with the bath water.

Have you been a baby before? If so, share or subscribe!

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Decentralized Twitter

That’s Farcaster, right? Yes! But there’s another effort I learned about from the Rug Radio Law Line spaces called Bluesky. This was brought up because of a viral tweet yesterday about Jack Dorsey (Twitter founder) and Elon Musk about building a decentralized social platform.

These texts were made public thanks to the ongoing Twitter vs. Elon court case.

Twitter avatar for @TechEmails

Internal Tech Emails @TechEmails

Jack Dorsey texts Elon Musk March 26, 2022

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8:48 PM ∙ Sep 29, 2022


29,005Likes4,282Retweets

Jack Dorsey apparently tweeted about this back in 2019. I was still in Instagram Land and pre-Web3 still.

Twitter avatar for @jack

jack @jack

Twitter is funding a small independent team of up to five open source architects, engineers, and designers to develop an open and decentralized standard for social media. The goal is for Twitter to ultimately be a client of this standard. 🧵

2:13 PM ∙ Dec 11, 2019


51,677Likes13,889Retweets

From that tweet, Bluesky was born.

Though initially funded by Twitter, Bluesky is independent from them as a Public Benefit LLC.

It’ll be interesting to compare and contrast the various decentralized social platforms (still need to try out Lens!). It’s hard to spend time on all these apps, in addition to existing ones, but it’s nice to see that there are different groups tackling the same problem. The pie is certainly big enough!

MAMA I MADE IT!

Definitely not. However, I was interviewed on the Crypto Business show and podcast!

Always fun to watch and listen to yourself talk 😂

In this interview I talk about the 3C Framework I wrote about a few months back. Share it with colleagues and friends that might be allergic to reading.

Shoutout to Mike for interviewing me and letting me share my thoughts about the space!

I’ll also be speaking at Mike’s Crypto Business Conference in about a week. I’ll be going over some case studies and sharing the good news of Web3. Fun times in sunny San Diego 🌞

See you next week!

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