UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

In the Matter of: 

bZeroX, LLC; Tom Bean; and 

Kyle Kistner, 

Respondents.

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CFTC Docket No. 22-31

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 

SECTION 6(c) AND (d) OF THE COMMODITY EXCHANGE ACT, MAKING 

FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I. INTRODUCTION

The Commodity Futures Trading Commission (“Commission”) has reason to believe 

that, from at least approximately June 1, 2019 to approximately August 23, 2021 (the “bZx 

Relevant Period”), bZeroX, LLC (“bZeroX”); Tom Bean (“Bean”); and Kyle Kistner (“Kistner”) 

(collectively, “Respondents”) violated Sections 4(a) and 4d(a)(1) of the Commodity Exchange 

Act (“Act”), 7 U.S.C. §§ 6(a), 6d(a)(1), and Commission Regulation (“Regulation”) 42.2, 

17 C.F.R. § 42.2 (2021); and that, from approximately August 23, 2021 to the present (the “DAO 

Relevant Period,” and together with the bZx Relevant Period, the “Relevant Period”), Bean and 

Kistner violated Sections 4(a) and 4d(a)(1) of the Act and Regulation 42.2. Therefore, the 

Commission deems it appropriate and in the public interest that public administrative 

proceedings be, and hereby are, instituted to determine whether Respondents engaged in the 

violations set forth herein and to determine whether any order should be issued imposing 

remedial sanctions. 

In anticipation of the institution of an administrative proceeding, Respondents have 

submitted an Offer of Settlement (“Offer”), which the Commission has determined to accept. 

Without admitting or denying any of the findings or conclusions herein, Respondents consent to 

the entry of this Order Instituting Proceedings Pursuant to Section 6(c) and (d) of the Commodity 

Exchange Act, Making Findings, and Imposing Remedial Sanctions (“Order”), and acknowledge 

service of this Order.1

1 Respondents consent to the use of the findings of fact and conclusions of law in this Order in this 

proceeding and in any other proceeding brought by the Commission or to which the Commission is a party or 

claimant, and agrees that they shall be taken as true and correct and be given preclusive effect therein, without 

further proof. Respondents do not consent, however, to the use of this Order, or the findings or conclusions herein, 

as the sole basis for any other proceeding brought by the Commission or to which the Commission is a party or 
2 

II. FINDINGS 

The Commission finds the following: 

A. SUMMARY 

During the Relevant Period, Respondents designed, deployed, marketed, and made 

solicitations concerning a blockchain-based software protocol that accepted orders for and 

facilitated margined and leveraged retail commodity transactions (functioning similarly to a 

trading platform). This protocol (the “bZx Protocol”) permitted users to contribute margin 

(collateral) to open leveraged positions whose ultimate value was determined by the price 

difference between two digital assets from the time the position was established to the time it 

was closed. The bZx Protocol purported to offer users the ability to engage in these transactions 

in a decentralized environment—i.e., without third-party intermediaries taking custody of user 

assets. 

In so doing, Respondents—who have never registered with the Commission—unlawfully 

engaged in activities that could only lawfully be performed by a registered designated contract 

market (“DCM”) and other activities that could only lawfully be performed by a registered 

futures commission merchant (“FCM”). In addition, Respondents did not conduct know-yourcustomer (“KYC”) diligence on their customers as part of a customer identification program 

(“CIP”), as required of FCMs. 

B. RESPONDENTS 

bZeroX, LLC is a Delaware limited liability company (“LLC”) with its registered agent 

in Delaware. bZeroX was founded and was co-owned and controlled during the bZx Relevant 

Period by Bean and Kistner. During the bZx Relevant Period, bZeroX created and operated the 

bZx Protocol that facilitated the unlawful transactions described herein. On approximately 

August 23, 2021, bZeroX transferred control of the bZx Protocol to the bZx DAO, a 

decentralized autonomous organization (“DAO”), which subsequently, on approximately 

December 18, 2021, renamed itself and is now doing business as the Ooki DAO.2 bZeroX has 

never been registered with the Commission in any capacity. 

Tom Bean is a Georgia resident who, with Kistner, founded, co-owned, and controlled 

bZeroX during the bZx Relevant Period. Bean is also a member of the Ooki DAO (formerly 

 

claimant, other than: a proceeding in bankruptcy or receivership; or a proceeding to enforce the terms of this Order. 

Respondents do not consent to the use of the Offer or this Order, or the findings or conclusions in this Order, by any 

other party in any other proceeding.

2

 As set forth below, the Ooki DAO is an unincorporated association comprised of holders of Ooki DAO 

Tokens (“Ooki Tokens”) who vote those tokens to govern (e.g., to modify, operate, market, and take other actions 

with respect to) the bZx Protocol (which the Ooki DAO has renamed the “Ooki Protocol”). The Ooki DAO 

(formerly doing business as the bZx DAO) has never been registered with the Commission in any capacity. By this 

Order, the Commission is resolving charges with bZeroX relating to its conduct during the bZx Relevant Period; 

with Bean and Kistner as control persons of bZeroX during the bZx Relevant Period, as well as for their active 

participation in the Ooki DAO (i.e., voting their BZRX or Ooki Tokens to govern the BZX DAO (later the Ooki 

DAO) by, for example, directing the operation of the bZx Protocol (later the Ooki Protocol)) during the DAO 

Relevant Period. This Order does not resolve charges with the Ooki DAO itself. 
3 

doing business as the bZx DAO) and has performed certain work (such as protocol development 

and marketing work) on the Ooki DAO’s behalf during the DAO Relevant Period. Bean has 

never been registered with the Commission in any capacity. 

Kyle Kistner is a Georgia resident who, with Bean, founded, co-owned, and controlled 

bZeroX during the bZx Relevant Period. Kistner is also a member of the Ooki DAO (formerly 

doing business as the bZx DAO) and has performed certain work (such as business and budget 

planning and marketing work) on the Ooki DAO’s behalf during the DAO Relevant Period. 

Kistner has never been registered with the Commission in any capacity. 

C. FACTS 

1. Respondents Designed, Deployed, Operated, Marketed, and Controlled the bZx 

Protocol During the bZx Relevant Period.

During the bZx Relevant Period, the bZx Protocol was a collection of smart contracts on 

the Ethereum blockchain that purported to facilitate transactions without intermediaries.3 The 

bZx Protocol enabled any person with an Ethereum wallet to contribute margin (collateral) to 

open leveraged positions whose value was determined by the price difference between two 

digital assets from the time the position was established to the time it was closed.4 For example, 

if a trader believed that the price of ETH would rise relative to the price of DAI, the trader might 

open a 5x long position in ETH versus DAI (i.e., a position worth five times the increase in the 

price of ETH relative to DAI from the time the position was established to the time it was 

closed). To do so, the trader would proceed as follows: 

1. The trader would post collateral (e.g., ETH) to a bZx Protocol smart contract as margin to 

open the leveraged position.5

2. The smart contract would borrow DAI from a bZx Protocol liquidity pool, whose assets 

were supplied by liquidity providers who, in exchange, had received interest-generating 

 

3

 A blockchain is a distributed, shared, immutable ledger that facilitates the process of recording transactions 

and tracking digital assets in a consensus-based network. A “smart contract” is a self-enforcing piece of computer 

code containing all terms of a contract—meaning the software can execute the agreement contained in the contract 

without additional input from the parties. 

4

 A digital asset is anything that can be stored and transmitted electronically and has associated ownership or 

use rights. Digital assets include virtual currencies, which are digital representations of value that function as 

mediums of exchange, units of account, and/or stores of value. Ether (“ETH”) is the Ethereum blockchain’s native 

virtual currency. In addition, Ethereum’s ERC-20 token standard permits the conversion of non-ETH virtual 

currencies into tokens that can be traded on Ethereum. For example, DAI is an ERC-20 token that can be transacted 

with on the Ethereum blockchain and whose value is pegged one-to-one to the price of the U.S. dollar. 

5

 Notably, positions on the bZx Protocol were required to be overcollateralized—i.e., the value of the 

collateral was required to exceed the value of the borrowed asset. This was to ensure repayment of the borrowed 

asset. Prior to a trader closing an open position, if the position had lost too much value, the bZx Protocol was 

designed to facilitate the automatic liquidation of the position and retention and sale of the posted collateral to cover 

the loss. 
4 

tokens, as well as BZRX Protocol Tokens (“BZRX Tokens”) conferring voting rights on 

certain matters relevant to bZx Protocol governance.6

3. The smart contract would exchange the borrowed DAI for ETH on a separate, on-chain 

decentralized exchange. 

4. The smart contract would lock (i.e., prevent from being withdrawn absent conditions 

expressly written in to the smart contract) the newly received ETH and create a token 

representing the newly established 5x long position. 

5. The smart contract would send that token to the trader. 

If the trader was correct (i.e., that the price of ETH would rise relative to the price of 

DAI), the trader could redeem the token reflecting the position for a profit (i.e., the smart 

contract would transfer the resulting profit to the trader). If the trader was incorrect (i.e., the 

price of ETH did not rise relative to the price of DAI), the trader could still redeem the token, 

except instead of paying profits, the smart contract would retain however much of the collateral 

was needed to cover the loss. If the trader wished to open a short position, the trading mechanics 

would be similar, except the trader would borrow ETH and swap it into DAI. Traders could 

open similar positions involving various additional virtual currencies. 

The transactions on the bZx Protocol did not involve contracts of sale of digital assets; 

rather, they involved leveraged positions whose value was determined by the price difference 

between two digital assets. Positions on the bZx Protocol automatically rolled over every 28 

days (and could thus exist perpetually) and could be liquidated at any time. 

bZeroX, through Bean and Kistner, among others, developed a website to market, solicit 

orders for, and facilitate access to the bZx Protocol. For example, bZeroX’s website claimed that 

it offered a superior margin trading experience because “[t]here is no need for any verification, 

KYC or AML.” The website further claimed that bZeroX did not take custody of users’ assets, 

and there were minimal liquidation penalties. Bean and Kistner also made public statements, 

appeared in interviews, wrote articles, led calls with community members that are publicly 

available on YouTube, and otherwise publicly marketed and solicited members of the public to 

utilize the bZx Protocol. The bZeroX website enabled users, through the click of a few buttons, 

to transfer assets and open positions on the bZx Protocol using the mechanics described above. 

bZeroX collected fees from users, including origination fees, trading fees, and a percentage of 

interest paid to lenders. bZeroX purports to have collected approximately $50,000 in fees prior 

to June 2020 (all of which was paid to auditors) and, between June 2020 and August 2021, 

approximately $500,000 in fees (approximately $350,000 of which was paid to employees, 

service providers, contractors, and other third parties for similar expenses).7

 

 

6

 The BZRX Tokens conferred voting rights in proportion to the holder’s percentage of total BZRX Tokens 

issued. Additional BZRX Tokens were otherwise minted and allocated to certain individuals, including Bean and 

Kistner. 

7

 Fees are held in BZRX Tokens or 3CRV (a stablecoin that is redeemable for DAI, USDT, or USDC on 

Curve.Finance). The listed figures reflect approximate conversions to U.S. Dollars as of approximately September 

14, 2021. 
5 

Prior to August 23, 2021 (at which time bZeroX transferred control of the bZx Protocol 

to the bZx DAO), bZeroX (through Bean and Kistner exclusively) retained “administrator keys” 

(“Keys”) permitting bZeroX to access and control the operation of, and the funds held in, the 

smart contracts involved in the above processes. The Keys enabled bZeroX, for example, to 

update relevant smart contract code to adjust how the smart contracts operated; pause or suspend 

trading; pause or suspend contributions or withdrawals of assets and redemptions of tokens to 

close positions; and otherwise direct disposition of the funds held in the bZx Protocol smart 

contracts.8 

During the bZx Relevant Period, bZeroX did not maintain a CIP and explicitly advertised 

the lack of KYC or AML compliance as a positive feature of the bZx Protocol. bZeroX offered 

any user anywhere in the world, including in the United States, the ability to trade on the bZx 

Protocol and, specifically, did not take any steps to exclude U.S. and/or non-eligible contract 

participants (“non-ECPs”) (as defined in Section 1a(18) of the Act, 7 U.S.C. § 1a(18)) from the 

bZx Protocol. 

Bean and Kistner controlled bZeroX during the bZx Relevant Period. For example, Bean 

and Kistner were the only members of bZeroX and were exclusively responsible for approving 

bZeroX’s business conduct, regulatory decisions, and the technical development of the bZx 

Protocol. 

2. During the DAO Relevant Period, Bean and Kistner Were Members of the bZx 

DAO (Eventually Renamed the Ooki DAO During the DAO Relevant Period), 

Which Controlled and Operated the bZx Protocol (Eventually Renamed the 

Ooki Protocol During the DAO Relevant Period). 

On approximately August 23, 2021, bZeroX transferred control of the bZx Protocol 

(including relevant Keys) to the bZx DAO. From that point forward, the bZx DAO could act 

with respect to the bZx Protocol only through a vote of BZRX Token holders. Bean and Kistner 

determined that transitioning to a DAO would insulate the bZx Protocol from regulatory 

oversight and accountability for compliance with U.S. law. As Kistner stated in a public call 

with the bZx community regarding the transition to the bZx DAO: 

It’s really exciting. We’re going to be really preparing for the new regulatory 

environment by ensuring bZx is future-proof. So many people across the industry 

right now are getting legal notices and lawmakers are trying to decide whether 

they want DeFi companies to register as virtual asset service providers or not – 

and really what we’re going to do is take all the steps possible to make sure that 

when regulators ask us to comply, that we have nothing we can really do because 

we’ve given it all to the community. 

 

8

 During the bZx Relevant Period, bZeroX did, in fact, utilize the Keys several times to pause trading and 

suspend users’ ability to withdraw funds following several alleged incidents on the bZx Protocol involving alleged 

third-party exploitation of deficiencies in the bZx Protocol’s code and theft of users’ assets. 
6 

In practice, however, the bZx DAO controlled and operated the bZx Protocol just as 

bZeroX before it had done. Just as bZeroX (like any LLC) governed the bZx Protocol through 

the votes of its members (i.e., Bean and Kistner), the bZx DAO governed the bZx Protocol 

through the votes of BZRX Token holders. Specifically, any BZRX Token holder had the right 

to propose, and to vote his or her BZRX Tokens to effect, changes to the bZx Protocol or 

otherwise shape the direction of the bZx DAO’s business. The general process was that any new 

proposals were first discussed on the bZx Community Forum (“bZx Forum”). Proposals that 

were not widely supported typically ended there. If there was sufficient support, a non-binding 

“snapshot vote” could be conducted to gauge support for a particular proposal. If a proponent 

believed there was sufficient support, a binding vote could be held directly on the bZx Protocol 

through a fork of the Compound Bravo Governance Module smart contract that enabled BZRX 

Token holders to vote those tokens for or against a proposal. Approved proposals were 

implemented by individuals as authorized by the bZx DAO. 

For example, on approximately August 24, 2021, Bean and Kistner proposed in the bZx 

Forum that the bZx DAO approve an omnibus funding plan for going-forward bZx DAO 

operations—including release of funds for marketing, operations, development, community 

management, and legal expenses. The proposal passed a snapshot vote unanimously, and BZRX 

Token holders voted to approve the proposal in September 2021. Funds were subsequently 

released from the bZx DAO Treasury (which contained bZx Protocol revenue) to pay certain of 

the approved expenses. Similarly, in approximately December 2021, the bZx DAO voted to 

utilize funds from the bZx DAO Treasury to compensate certain bZx DAO members who lost 

funds in connection with an alleged security breach and theft of funds on the bZx Protocol. 

More generally, Bean and Kistner possess BZRX Tokens and have participated in bZx DAO 

governance, including by participating in many discussions in online governance forums, making 

other governance proposals, and voting their BZRX Tokens in favor of such proposals. 

During the DAO Relevant Period, the bZx Protocol otherwise operated as described in 

Section II.C.1 supra, through the votes and acquiescence of the bZx DAO. With the bZx DAO’s 

support, Bean and Kistner continued to market and publicly solicit members of the public to 

trade on the bZx Protocol. The bZx DAO controlled all Keys previously controlled by bZeroX. 

Like bZeroX, the bZx DAO did not maintain a CIP, explicitly advertised the lack of KYC or 

AML compliance as a positive feature of the bZx Protocol, and did not take any steps to exclude 

U.S. and/or non-ECPs from the bZx Protocol. 

On approximately December 18, 2021, through a vote of BZRX Token holders, the bZx 

DAO renamed itself the Ooki DAO. The bZx DAO repeatedly publicly described this process as 

merely a “rebrand.” This process did not result in legal changes to the DAO’s business or 

material changes to its operations.9

 The Ooki DAO now operates the bZx Protocol (which the 

 

9

 Respondents represent that, at this time, bZeroX (which, as described above, was the predecessor to the 

bZx DAO and had not operated the bZx Protocol since it transferred control over the bZx Protocol to the bZx DAO 

on or about August 23, 2021) ceased engaging in any business activities; and, from this point forward, that certain 

members of the bZx DAO did not engage in additional activities relating to the newly renamed Ooki Protocol. In 

addition, Respondents represent that, in connection with this rebrand, the Ooki DAO deployed additional smart 

contracts that controlled staking and governance for the Ooki DAO, just as previous smart contracts controlled 

staking and governance for the bZx DAO. These additional smart contracts were largely necessitated by the fact 

that the renamed Ooki DAO now offered Ooki Tokens (instead of BZRX Tokens) to govern the renamed Ooki 
7 

Ooki DAO has renamed the Ooki Protocol) in the exact same manner that the bZx DAO operated 

the bZx Protocol (i.e., through the votes of Ooki Token holders). The Ooki DAO website 

describes specific Ooki DAO procedures for proposing and voting on Ooki DAO governance 

proposals, which are consistent with the procedures utilized when the Ooki DAO was doing 

business as the bZx DAO, as summarized above. 

III. LEGAL DISCUSSION 

A. During the bZx Relevant Period, Respondents Violated Sections 4(a) and 4d(a)(1) of 

the Act and Regulation 42.2. 

1. Respondents Engaged in Unlawful Off-Exchange Leveraged and Margined 

Retail Commodity Transactions in Violation of Section 4(a) of the Act. 

Virtual currencies such as ETH, DAI, and others traded on the bZx Protocol are 

“commodities” under the Act. See, e.g., United States v. Reed, No. 20-cr-500 (JGK), 2022 WL 

597180, at *3-5 (S.D.N.Y. Feb. 28, 2022); CFTC v. McDonnell, 287 F. Supp. 3d 13, 228-29 

(E.D.N.Y. 2018); In re Coinflip, Inc., CFTC No. 15-29, 2015 WL 5535736, at *2 (Sept. 17, 

2015). 

Section 2(c)(2)(D) of the Act, 7 U.S.C. § 2(c)(2)(D), applies to “any agreement, contract, 

or transaction in any commodity that is . . . entered into with, or offered to (even if not entered 

into with), a [non-ECP] . . . on a leveraged or margined basis . . . .” and which does not result in 

actual delivery within 28 days (hereafter, “leveraged or margined retail commodity 

transactions”). Act § 2(c)(2)(D)(i), (ii)(III)(aa), 7 U.S.C § 2(c)(2)(D)(i), (ii)(III)(aa). Section 

4(a) of the Act, 7 U.S.C. § 6(a), applies to leveraged or margined retail commodity transactions 

as if those transactions were contracts of sale of a commodity for future delivery. Act 

§ 2(c)(2)(D)(iii), 7 U.S.C § 2(c)(2)(D)(iii). 

Section 4(a) of the Act, 7 U.S.C. § 4(a), in relevant part, makes it unlawful for any person 

to offer to enter into, enter into, execute, confirm the execution of, or conduct an office or 

business in the United States for the purpose of soliciting or accepting any order for, or otherwise 

dealing in, any transaction in, or in connection with, a contract for the purchase or sale of a 

commodity for future delivery, unless such transaction is made on or subject to the rules of a 

board of trade that has been designated or registered by the CFTC as a contract market for the 

specific commodity (i.e., a DCM). 

During the bZx Relevant Period, utilizing the bZx Protocol, bZeroX offered to enter into, 

entered into, executed, confirmed the execution of, and/or conducted business in the United 

States for the purpose of soliciting and/or accepting orders for, and/or otherwise dealing in, 

leveraged or margined retail commodity transactions with non-ECP U.S. residents that did not 

result in actual delivery within 28 days. These leveraged or margined retail commodity 

transactions were not conducted on or subject to the rules of a board of trade that has been 

 

Protocol, and BZRX Token holders needed the ability to convert those tokens into Ooki Tokens (as they were 

permitted to do), and votes by holders of those Ooki Tokens (instead of holders of BZRX Tokens) would now be 

used to govern the Ooki Protocol. 
8 

designated or registered by the CFTC as a contract market. Thus, Respondents violated Section 

4(a) of the Act. 

2. Respondents Unlawfully Engaged in Activities That Could Only Lawfully Be 

Performed by Registered FCMs in Violation of Section 4d(a)(1) of the Act. 

Section 1a(28) of the Act, 7 U.S.C. § 1a(28), in relevant part, defines an FCM as any 

individual, association, partnership, corporation or trust that engages in soliciting or in accepting orders 

for “any agreement, contract, or transaction described in... section (2)(c)(2)(D)(i)” and, in connection 

therewith, “accepts any money... or property (or extends credit in lieu thereof) to margin . . . trades or 

contracts that result or may result therefrom.” Section 4d(a)(1) of the Act, 7 U.S.C. § 6d(a)(1), in 

pertinent part, makes it unlawful for any person to act as an FCM unless registered with the 

Commission as an FCM. See, e.g., Reed, 2022 WL 597180, at *2-3 (holding indictment 

sufficiently alleged that entity operated as an unregistered FCM where entity solicited and 

accepted orders for trades in futures contracts and other derivative products tied to the value of 

virtual currencies, accepted virtual currency to margin and guarantee its derivative products, and 

offered leverage to customers on certain products). 

As described above, during the bZx Relevant Period, bZeroX, utilizing the bZx Protocol, while 

not registered as an FCM, acted as an FCM as defined in Section 1a(28) of the Act by soliciting and 

accepting orders for leveraged or margined retail commodity transactions with customers; and 

accepting money or property to margin those transactions. Thus, Respondents violated Section 

4d(a)(1) of the Act.10

3. Respondents Failed to Adopt a CIP in Violation of Regulation 42.2. 

Regulation 42.2, 17 C.F.R. § 42.2 (2021), provides that every FCM shall comply with the Bank 

Secrecy Act and related regulations, which require the FCM to adopt a CIP to facilitate KYC diligence 

on the FCM’s customers. Regulation 42.2 applies to individuals and entities acting as unregistered 

FCMs. See, e.g., CFTC v. HDR Global Trading Limited, No. 1:20-cv-08132, 2021 WL 3722183 at 

¶ 39 (S.D.N.Y. Aug. 10, 2021) (consent order) (finding defendant who acted as an unregistered FCM 

liable for failing to adopt a CIP as required by Regulation 42.2). 

During the bZx Relevant Period, by acting as an unregistered FCM, bZeroX was required to 

adopt a CIP but failed to do so, and in fact explicitly marketed the lack of KYC diligence as a positive 

feature of the bZx Protocol. In so doing, Respondents violated Regulation 42.2. 

 

10 The Commission issues this Order because Respondents, who were not registered with the Commission, 

engaged in certain activities that could only lawfully be performed by a registered DCM, and other activities that 

could only lawfully be performed by a registered FCM. It was (and remains) Respondents’ responsibility to avoid 

unlawfully engaging in activities that could only be performed by registered entities and, should they ever wish to 

register, to structure their business in a manner that is consistent with Commission registration requirements. See, 

e.g., Reed, 2022 WL 597180, at *3 (holding that even if an entity might have fallen within multiple of the Act’s 

registration categories, “the [Act’s] registration categories are not exclusive of one another,” and whether an entity 

unlawfully acted as an unregistered FCM should be determined simply by whether the entity “fall[s] . . . within the 

definition of an FCM”). 
9 

4. Respondents Bean and Kistner Are Liable as Controlling Persons for bZx’s 

Violations of the Act and Regulation 42.2. 

Controlling persons are liable for violations of the entities they control under certain 

circumstances. Section 13(b) of the Act, 7 U.S.C. § 13c(b), states that a controlling person of an 

entity is liable for the violations of that entity if the controlling person knowingly induced the 

violations, directly or indirectly, or did not act in good faith. “A fundamental purpose of Section 

13[(b)] is to allow the Commission to reach behind the corporate entity to the controlling 

individuals of the corporation and to impose liability for violations of the Act directly on such 

individuals as well as the corporation itself.” R.J. Fitzgerald, 310 F.3d at 1334 (citation omitted) 

(holding defendant was a controlling person when the defendant was the company’s principal 

and “exercised the ultimate choice-making power with the firm regarding its business decisions,” 

“reviewed and approved the activities that . . . violated the Act,” and “was ultimately responsible 

for compliance with all applicable rules on commodities solicitations”). 

During the bZx Relevant Period, Bean and Kistner controlled bZeroX, directly or indirectly, 

and did not act in good faith or knowingly induced, directly or indirectly, bZeroX’s act or acts in 

violation of the Act and Regulations; therefore, pursuant to Section 13(b) of the Act, Bean and Kistner 

are liable for bZeroX’s violations of Sections 4(a) and 4d(a)(1) of the Act and Regulation 42.2. 

B. During the DAO Relevant Period, the Ooki DAO (formerly d/b/a the bZx DAO) 

Violated Sections 4(a) and 4d(a)(1) of the Act and Regulation 42.2, and Bean and 

Kistner, as Members of the Ooki DAO, Are Personally Liable for the Ooki DAO’s 

Violations. 11

1. The Ooki DAO Is an Unincorporated Association. 

An unincorporated association is “a voluntary group of persons, without a charter, formed 

by mutual consent for the purpose of promoting a common objective.” See, e.g., So. Cal. Darts 

Ass’n v. Zaffina, 762 F.3d 921, 927 (9th Cir. 2014) (holding that former incorporated entity 

promoting competitive play of darts whose corporate powers had been suspended was an 

unincorporated association under federal law); Heinold Hog Market, Inc. v. McCoy, 700 F.2d 

611, 613-14 (10th Cir. 1983) (holding that the “National Commodity Exchange” (“NCE”), an 

affiliate of an organization devoted to tax reform that converted customers’ federal reserve notes 

to gold and silver and then back to federal reserve notes to pay customer creditors, was an 

unincorporated association where multiple individuals operated the NCE with the purpose of 

allowing customers to pay creditors without generating a paper trail in the Federal Reserve 

System); Seattle Affiliate of October 22nd Coalition to Stop Police Brutality, Repression and the 

Criminalization of a Generation v. City of Seattle, No. C04 0860L, 2005 WL 3418415, at *2 

(W.D. Wash. Dec. 12, 2005) (holding that local advocacy group was an unincorporated 

association despite that group did not have an official “membership” list where group had existed 

in city for years; operated as a local affiliate of a national group; participated in publications, 

 

11 In this section, the Commission uses the term “Ooki DAO” as shorthand for the “Ooki DAO (formerly 

d/b/a the bZx DAO).” Likewise, in this section, the Commission uses the term “Ooki Protocol” as shorthand for the 

“Ooki Protocol (formerly branded as the bZx Protocol).” 
10 

events, and rallies; and utilized an egalitarian, volunteer-oriented structure to meet its 

objectives). 

The Ooki DAO meets the federal definition of an unincorporated association. It is a 

“voluntary group of persons” (Ooki Token holders who voluntarily vote their Ooki Tokens), 

“without a charter” (no Ooki DAO corporate charter exists), “formed by mutual consent for the 

purpose of promoting a common objective” (Ooki Token holders who voluntarily vote for the 

purpose of promoting the common objective of governing the Ooki Protocol). Notably, the Ooki 

DAO exists for exactly the same purpose as bZeroX before it—to run a business (i.e., to govern 

and operate the Ooki Protocol). The Ooki DAO is thus an unincorporated association. 

While the Ooki DAO does not explicitly define its own membership, the federal 

definition of an unincorporated association makes clear that the Ooki DAO is comprised of 

individuals who voluntarily join together to pursue the common objective of participating in the 

governance of the Ooki Protocol. An unambiguous way that individuals join together to govern 

the Ooki Protocol is by voting their Ooki Tokens. Once an Ooki Token holder votes his or her 

Ooki Tokens to affect the outcome of an Ooki DAO governance vote, that person has voluntarily 

participated in the group formed to promote the common objective of governing the Ooki 

Protocol and is thus a member of the Ooki DAO unincorporated association. 

2. The Ooki DAO Violated Sections 4(a) and 4d(a)(1) of the Act and Regulation 

42.2 During the DAO Relevant Period. 

The Ooki DAO controlled and operated the Ooki Protocol (including the Keys to the 

Ooki Protocol) during the entirety of the DAO Relevant Period in the same manner that bZeroX 

controlled and operated the bZx Protocol during the bZx Relevant Period. 

Thus, during the DAO Relevant Period, utilizing the Ooki Protocol, the Ooki DAO 

offered to enter into, entered into, executed, confirmed the execution of, and/or conducted 

business in the United States for the purpose of soliciting and/or accepting orders for, and/or 

otherwise dealing in, leveraged or margined retail commodity transactions with non-ECP U.S. 

residents that did not result in actual delivery within 28 days. These leveraged or margined retail 

commodity transactions were not conducted on or subject to the rules of a board of trade that has 

been designated or registered by the CFTC as a contract market. Thus, the Ooki DAO violated 

Section 4(a) of the Act. 

Similarly, during the DAO Relevant Period, the Ooki DAO, while not registered as an 

FCM, acted as an FCM as defined in Section 1a(28) of the Act by soliciting and accepting orders for 

leveraged or margined retail commodity transactions with customers; and accepting money or property 

to margin those transactions. Thus, the Ooki DAO violated Section 4d(a)(1) of the Act. 

Finally, during the DAO Relevant Period, by acting as an unregistered FCM, the Ooki DAO 

was required to adopt a CIP but failed to do so, and in fact explicitly marketed the lack of KYC 

diligence as a feature of the Ooki Protocol. In so doing, the Ooki DAO violated Regulation 42.2. 
11 

3. As Members of the Ooki DAO, Bean and Kistner Are Personally Liable for the 

Ooki DAO’s Violations of the Act and Regulation 42.2. 

Individual members of an unincorporated association organized for profit are personally 

liable for the debts of the association under principles of partnership law. See, e.g., Karl Rove & 

Co. v. Thornburgh, 39 F.3d 1273, 125 (5th Cir. 1994) (citations omitted) (distinguishing liability 

of individual members of for-profit unincorporated associations, which is determined by 

partnership law, with liability of individual members of non-profit unincorporated associations, 

which is determined by the law of agency); Shortlidge v. Gutoski, 484 A.2d 1083, 1086 (N.H. 

1984) (citations omitted) (noting that each member of an unincorporated association organized 

for profit is treated as a partner of the association, is jointly liable with other members for the 

association’s debts, and can have his or her personal assets reached by creditors of the 

association; and noting that membership in unincorporated associations often “results from sheer 

ignorance of the possible degree of personal liability of its members”); Libby v. Perry, 311 A.2d 

527, 533 (Me. 1973) (citation omitted) (noting established rule that in for-profit voluntary 

unincorporated associations, “members are mere partners and as such are personally liable for all 

its debts”). 

The Ooki DAO is a for-profit unincorporated association. It charges fees for its products 

and services, generates revenue, has distributed revenue to its members in various forms, offers 

ownership rights in the Ooki DAO in the form of Ooki Tokens, collects and liquidates collateral 

from users, and has never sought to be characterized as a non-profit organization in any federal 

or state registration or tax filing. See, e.g., Heinold Hog Market, 700 F.2d at 615-16 (noting that 

unincorporated association NCE appeared to operate for profit where it charged for its services, 

bought and sold commodities, assumed the risk of commodity market price declines, and 

recouped losses from account holders when prices increased). 

As members of the for-profit Ooki DAO unincorporated association (i.e., as Ooki Token 

holders who voted their Ooki Tokens to govern the Ooki DAO by, for example, directing the 

operation of the Ooki Protocol), Bean and Kistner are personally liable for the Ooki DAO’s 

debts. Accordingly, they are personally liable for the Ooki DAO’s violations of the Act and 

Regulations set forth in Section III.B.2 supra.

12

 

12 As set forth in Note 2 supra, by this Order, the Commission is resolving charges against Bean and Kistner 

for their actions as members of the Ooki DAO, but is not resolving charges against the Ooki DAO itself. As such, 

the Commission does not take a position in this Order as to the appropriate monetary sanctions against the Ooki 

DAO for the violations of law described herein. 
12 

IV. FINDINGS OF VIOLATIONS 

Based on the foregoing, the Commission finds that, during the Relevant Period, 

Respondents violated Sections 4(a) and 4d(a)(1) of the Act, 7 U.S.C. §§ 6(a) and 6d(a)(1), and 

Regulation 42.2, 17 C.F.R. § 42.2 (2021). 

V. OFFER OF SETTLEMENT 

Respondents have submitted the Offer in which they, without admitting or denying the 

findings and conclusions herein: 

A. Acknowledge service of this Order; 

B. Admit the jurisdiction of the Commission with respect to all matters set forth in this 

Order and for any action or proceeding brought or authorized by the Commission based 

on violation of or enforcement of this Order; 

C. Waive: 

1. The filing and service of a complaint and notice of hearing; 

2. A hearing; 

3. All post-hearing procedures; 

4. Judicial review by any court; 

5. Any and all objections to the participation by any member of the Commission’s 

staff in the Commission’s consideration of the Offer; 

6. Any and all claims that they may possess under the Equal Access to Justice Act, 

5 U.S.C. § 504, and 28 U.S.C. § 2412, and/or the rules promulgated by the 

Commission in conformity therewith, Part 148 of the Regulations, 17 C.F.R. 

pt. 148, relating to, or arising from, this proceeding; 

7. Any and all claims that they may possess under the Small Business Regulatory 

Enforcement Fairness Act of 1996, Pub. L. No. 104-121, tit. II, §§ 201–253, 110 

Stat. 847, 857–74 (codified as amended at 28 U.S.C. § 2412 and in scattered 

sections of 5 U.S.C. and 15 U.S.C.), relating to, or arising from, this proceeding; 

and 

8. Any claims of Double Jeopardy based on the institution of this proceeding or the 

entry in this proceeding of any order imposing a civil monetary penalty or any 

other relief, including this Order; 

D. Stipulate that the record basis on which this Order is entered shall consist solely of the 

findings contained in this Order to which Respondents have consented in the Offer; 
13 

E. Consent, solely on the basis of the Offer, to the Commission’s entry of this Order that: 

1. Makes findings by the Commission that Respondents violated Sections 4(a) and 

4d(a)(1) of the Act, 7 U.S.C. §§ 6(a) and 6d(a)(1), and Regulation 42.2, 17 C.F.R. 

§ 42.2 (2021); 

2. Orders Respondents to cease and desist from violating Sections 4(a) and 4d(a)(1) 

of the Act and Regulation 42.2; 

3. Orders Respondents to pay, jointly and severally, a civil monetary penalty in the 

amount of two hundred and fifty thousand dollars ($250,000) within ten (10) days 

of the date of entry of this Order, plus post-judgment interest in the event such 

civil monetary penalty is not paid within ten days of the date of entry of this Order; 

4. Orders Respondents and any of bZeroX’s successors and assigns to comply with 

the conditions and undertakings consented to in the Offer and as set forth in Part 

VI of this Order. 

Upon consideration, the Commission has determined to accept the Offer. 

VI. ORDER 

Accordingly, IT IS HEREBY ORDERED THAT: 

1. Respondents and any of bZeroX’s successors and assigns shall cease and desist from 

violating Sections 4(a) and 4d(a)(1) of the Act, 7 U.S.C. §§ 6(a) and 6d(a)(1), and 

Regulation 42.2, 17 C.F.R. § 42.2 (2021). 

2. Respondents shall pay, jointly and severally, a civil monetary penalty in the amount of 

two hundred and fifty thousand dollars ($250,000) (“CMP Obligation”), within ten (10) 

days of the date of the entry of this Order. If the CMP Obligation is not paid in full 

within ten days of the date of entry of this Order, then post-judgment interest shall accrue 

on the CMP Obligation beginning on the date of entry of this Order and shall be 

determined by using the Treasury Bill rate prevailing on the date of entry of this Order 

pursuant to 28 U.S.C. § 1961. 

Respondents shall pay the CMP Obligation and any post-judgment interest by electronic 

funds transfer, U.S. postal money order, certified check, bank cashier’s check, or bank 

money order. If payment is to be made other than by electronic funds transfer, then the 

payment shall be made payable to the Commodity Futures Trading Commission and sent 

to the address below:

MMAC/ESC/AMK326 

Commodity Futures Trading Commission 

Division of Enforcement 

6500 S. MacArthur Blvd. 

HQ Room 181 

Oklahoma City, OK 73169 
14 

(405) 954-6569 office 

(405) 954-1620 fax 

Tonia.King@faa.gov 

 If payment is to be made by electronic funds transfer, Respondents shall contact Tonia 

King or her successor at the above address to receive payment instructions and shall fully 

comply with those instructions. Respondents shall accompany payment of the CMP 

Obligation with a cover letter that identifies the paying Respondent and the name and 

docket number of this proceeding. The paying Respondent shall simultaneously transmit 

copies of the cover letter and the form of payment to the Chief Financial Officer, 

Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, 

Washington, D.C. 20581, and to Charles Marvine, Deputy Director, Commodity Futures 

Trading Commission, 2600 Grand Boulevard, Suite 210, Kansas City, MO 64108. 

3. Respondents and any of bZeroX’s successors and assigns shall comply with the following 

conditions and undertakings set forth in the Offer: 

1. Public Statements: Respondents agree that neither they nor any of bZeroX’s

successors and assigns, agents or employees under their authority or control shall 

take any action or make any public statement denying, directly or indirectly, any 

findings or conclusions in this Order or creating, or tending to create, the 

impression that this Order is without a factual basis; provided, however, that 

nothing in this provision shall affect Respondents’: (i) testimonial obligations; or 

(ii) right to take legal positions in other proceedings to which the Commission is 

not a party. Respondents and any of bZeroX’s successors and assigns shall 

comply with this agreement and shall undertake all steps necessary to ensure that 

all of their agents and/or employees under their authority or control understand 

and comply with this agreement. 

2. Cooperation, in General: Respondents shall cooperate fully and expeditiously 

with the Commission, including the Commission’s Division of Enforcement and 

any other governmental agency or any self-regulatory organization, in this action, 

and in any current or future Commission investigation, civil litigation, or 

administrative matter relating to, or arising from, this action, including but not 

limited to any Commission lawsuit against the Ooki DAO. As part of such 

cooperation, Respondents agree to voluntarily, for example, produce documents, 

things, and information as requested, provide declarations, respond to written 

discovery, and give testimony. 

3. Participation in the Ooki DAO: Respondents shall cease all participation in the 

governance, operation, or any other activities of the Ooki DAO. Without 

limitation, Respondents shall not make proposals, directly or indirectly through 

others, related to Ooki DAO governance; or vote any Ooki Tokens they own or 

control. 

4. Partial Satisfaction: Respondents understand and agree that any acceptance by 

the Commission of any partial payment of Respondents’ CMP Obligation shall