Brian Armstrong, CEO of Coinbase, has fervently urged decentralized finance (DeFi) protocols to pursue legal action against the United States Commodity Futures Trading Commission (CFTC), contending that this legal confrontation is crucial to safeguard the integrity and innovation of the DeFi sector.
In recent weeks, the CFTC has taken action against three DeFi companies: Deridex, Opyn, and ZeroEx, accusing them of engaging in illicit cryptocurrency derivatives trading.
Deridex and Opyn have been charged with failure to register as a swap execution facility (SEF) or designated contract market (DCM). Additionally, they neglected to implement a customer identification program as required by the Bank Secrecy Act. ZeroEx, on the other hand, stands accused of offering unlawful leveraged retail commodity transactions involving digital assets.
In recent statements, the director of the Commodity Futures Trading Commission’s enforcement division has labeled unregulated decentralized finance exchanges as a “clear and significant threat”.
Brian Armstrong, the CEO of Coinbase, has publicly expressed his support for DeFi protocols. He tweeted, “The CFTC should reconsider enforcement actions against DeFi protocols. As they don’t function as similar to traditional financial service businesses, and the applicability of the Commodity Exchange Act is dubious.”
Future Brian Armstrong states, “I hope these DeFi protocols take these cases to court to establish a precedent. The courts have a strong track record of upholding the rule of law. All this is doing is pushing a vital industry offshore.”
Armstrong isn’t alone in his support for DeFi protocols. Some lawmakers, including Republican Commissioner Summer Mersinger, are emphasizing the importance of clear regulations for DeFi rather than immediate enforcement actions by the CFTC.
“The CFTC should prioritize providing clear regulations for DeFi rather than resorting to enforcement actions. Engaging with the public and establishing clear rules should be our priority.”
This development occurs amid heightened scrutiny faced by cryptocurrency firms like Coinbase and Binance by U.S. regulators, including the SEC.
Simultaneously, the U.S. government has intensified its oversight of decentralized finance. Various government agencies have introduced regulatory measures, sanctions, and enforcement actions to bolster their control over DeFi players.
Celebrating Wins
In a recent victory, the CFTC successfully pursued Ooki DAO, a DeFi platform accused of running an illicit trading platform and violating regulatory rules. A federal judge ordered the closure of Ooki DAO and imposed a substantial fine exceeding $600,000.
As the DeFi sector grapples with regulatory challenges, the call for legal action against the CFTC promises to spark a robust dialogue about the future of decentralized finance within the United States.
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