Welcome to State of Crypto. Here's what's important in policy news this week: The Commodity Futures Trading Commission (CFTC) had what looked like an easy case against Ooki DAO. The allegations weren’t really in dispute and the decentralized autonomous organization itself didn’t seem able to put together a response in time for a court-mandated deadline. However, a near-last-minute intervention has breathed new life into the legal battle. — Nikhilesh De |
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How Crypto Advocates Are Defending Ooki DAO |
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District Judge William Orrick, of the U.S. District Court for the Northern District of California, ruled last week that LeXpunK Army and the DeFi Education Fund could file amicus (friend of the court) briefs in the CFTC v. Ooki DAO case. |
The allowance of these amicus briefs throws what looked like an inexorable case into a puzzle. We now no longer know just how this might resolve, and there's a chance the CFTC’s effort to define a DAO as an unincorporated association might fail. |
Something a little strange happened last week. I got back to my hotel room, checked the federal court Pacer database and discovered that a federal judge had, surprisingly, approved a longshot motion by two crypto groups – LeXpunK Army and DeFi Education Fund – to weigh in on the CFTC’s case against Ooki DAO. The briefs were in by Monday (alongside another motion by Paradigm), and the CFTC has until Nov. 7 (three weeks) to respond. We’ll have a hearing on Nov. 30, where the parties can argue their motions before the court. There are a couple of things going on here. |
| First off, it was surprising when the judge ruled in favor of the CFTC’s motion for alternative service, which allowed the agency to say it had served the Ooki DAO members by posting in a forum and a help bot. It was also surprising when the judge then allowed the friend of the court briefs, and said, “I interpret these requests as Motions for Reconsideration regarding my decision to permit alternative service in this case,” meaning he essentially paused that previous order. |
It seemed a much-needed chance for the Ooki DAO members to continue to figure out whether and how they'll defend themselves in court. Read the full story here. |
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The end of 2022 is fast approaching. The midterm elections are in less than three weeks, so we won’t see much legislative action for a little bit. Here’s where current legislative efforts stand. The House Financial Services stablecoin bill: We’ve been hearing a lot about this bill’s development, but at this point it sure seems like it’ll be a 2023 effort. We might still see some kind of draft legislative language introduced this year, but that’s about it. At DC Fintech Week last week, Rep. Patrick McHenry (R-N.C.), the ranking member of the committee, said he and Chair Maxine Waters (D-Calif.) agreed on how they defined the term “stablecoin” and what the components of the asset include, but suggested that there's still work to be done on other issues like how to assign a federal regulator. Moreover, at CoinDesk’s IDEAS conference in New York, Rep. Jim Himes (D-Conn.) explicitly said the bill is not happening this year, and is not likely to happen in the early part of 2023. The Digital Commodities Consumer Protection Act: The DCCPA is the Stabenow-Boozman bill introduced to the Senate Agriculture Committee by senators Deborah Stabenow (D-Mich.) and John Boozman (R-Ark.) that, if passed, would give the Commodity Futures Trading Commission some more regulatory oversight jurisdiction of crypto spot markets. Sen. Kirsten Gillibrand (D-N.Y.), who is a cosponsor on the bill, said she expects a markup to occur before the end of the year. In speaking to others, this does seem like it may actually happen, though passage is still a question mark. If you’ll indulge in some rumor proliferation, the big one right now is that this bill may get attached to the National Defense Authorization Act or another broad bill before the end of the year. I haven’t heard any concrete confirmation of this one way or another, but at the least it does seem like we’ll hear more from this bill before the year’s up. |
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Key: (nom.) = nominee, (rum.) = rumored, (act.) = acting, (inc.) = incumbent (no replacement anticipated) |
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| (Platformer) This was a pretty weird one. So the background here is The Wire, a reputable news organization, reported last week that Meta (formerly Facebook) had allowed a senior BJP official (India’s ruling party) the ability to order Instagram posts taken down at will for any reason. It seemed reasonable because, as Casey Newton and Zoë Schiffer point out, the BJP has in the past actually tried doing just this. However, Meta denied the claim, leading to The Wire publishing what looks very much like a faked email, which was then supposedly verified by people, at least one of whom found out after the fact and denied helping verify its authenticity. Newton and Schiffer have more. The Wire announced it would review the story and its reporting on Tuesday. (The Washington Post) The Bering Strait snow crab population declined by about 7 billion over three years, leading Alaska’s Department of Fish and Game to cancel this year’s snow crab fishing season. There seems to be a reasonable argument to be made that overfishing of the waters where snow crabs used to grow up has led to their mysterious disappearance, but this is basically part of the broader ecological collapse we’re starting to see from climate change. (The New York Times) Internal Revenue Service Commissioner Charles Rettig’s term expires next month, and U.S. President Joe Biden has yet to nominate a successor. (Felix Krause) Security researcher Felix Krause reports that Facebook and Instagram’s in-app browsers track all user behavior if they click on third-party links within the app. In other words, if you’re, for example, clicking on the link in the biography of an Instagram user and it opens in the Instagram browser, the app will track your activity, and could allow the company to log and track every input you make on that site. Krause pointed to potentially buying goods on Instagram as an example. Users can open links in another browser – or use the browser versions of these apps – as a way to bypass this. |
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If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at [email protected] or find me on Twitter @nikhileshde. You can also join the group conversation on Telegram. See ya’ll next week! |
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