A commissioner with the Commodity Futures Trading Commission (CFTC) disagrees with the agency’s decision to file enforcement action against three decentralized finance (DeFi) companies.
Last week, the CFTC announced that it charged DeFi protocols ZeroEx, Opyn and Deridex for offering illegal derivatives trading.
The regulator says it also ordered the three firms to pay monetary penalties and to cease and desist from violating the Commodity Exchange Act (CEA) and other CFTC regulations.
“Each respondent engaged in these activities in connection with blockchain-based software protocols and smart contracts, commonly referred to as DeFi, that functioned similarly to trading platforms, and which purported to offer users the ability to engage in transactions in a decentralized environment.”
In her dissenting statement, CFTC commissioner Summer Mersinger says she is not against the CFTC filing enforcement cases in new areas, especially when aimed at protecting consumers from fraud and abuse, but that the action against the three DeFi firms isn’t justified.
“The Commission’s Orders in these cases give no indication that customer funds have been misappropriated or that any market participants have been victimized by the DeFi protocols on which the Commission has unleashed its enforcement powers.”
Mersinger says the CFTC’s order against the three DeFi protocols characterizes a hostile stance towards DeFi.
“We are asked to find liability and impose sanctions based on a novel technology that was decentralized in conception and operation—an area that has not previously been the subject of a CFTC enforcement action.”
The commissioner also says that enforcement is “inherently ill-suited” to the regulator’s aim of protecting consumers while also promoting responsible innovation.
