Lido DAO Participants Can Be Held Liable Declares US Court

• The U.S. District Court ruled that Lido DAO is a general partnership under California law.
• The court ruled that Lido DAO participants can be held liable despite its decentralized structure.

A U.S. District Court judge has classified Lido DAO as a general partnership, setting a new precedent for decentralized organizations (DAOs). The ruling, issued on November 18, 2024, by Judge Vince Chhabria of the Northern District of California, means that participants in Lido DAO can be held liable for the organization’s actions under California’s partnership laws.

The case stems from a lawsuit filed by Andrew Samuels, who accused Lido DAO of selling unregistered securities after purchasing Lido tokens. Samuels argued that the platform failed to register its tokens with the SEC, leading to his financial losses. The court rejected Lido’s defense that it was not a legal entity, instead holding that its decentralized structure did not shield its participants from liability.

The ruling specifically named major institutional investors—Paradigm Operations, Andreessen Horowitz, and Dragonfly Digital Management—as general partners, based on their active roles in Lido’s governance. However, Robot Ventures was dismissed from the case due to insufficient evidence of involvement.

This decision could have wide implications for how profit-driven DAOs are treated under U.S. law. It’s important particularly when it comes to liability and securities regulations.

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