coinspress.com
A recent ruling by the U.S. District Court for the Northern District of California has determined that Lido DAO, a cryptocurrency staking platform, qualifies as a general partnership under state law.
This decision challenges the notion that decentralized autonomous organizations (DAOs) can evade legal accountability due to their decentralized structure.
The court dismissed arguments suggesting Lido DAO lacked legal personality, affirming that participants involved in managing the DAO’s operations could be held liable. It was noted that these participants benefitted financially from their roles, making Lido DAO subject to partnership laws. Furthermore, the court determined that while Lido DAO did not directly sell its native LDO tokens, its promotion and marketing activities through exchanges constituted a securities sale.
Judge Vince Chhabria, who presided over the case, remarked that this ruling highlights the limitations of using decentralized frameworks to bypass legal responsibilities. Under California law, he clarified, a general partnership is formed when two or more parties co-own a business with the intent to profit, regardless of formal intentions.
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The case stems from a class-action lawsuit filed by Andrew Samuels, who alleged he purchased LDO tokens through the Gemini exchange in 2023 and suffered financial losses. Samuels claimed the tokens were sold as unregistered securities, and the court acknowledged these grievances, holding Lido DAO accountable for the token’s depreciation.
This landmark decision sets a significant precedent for how profit-driven DAOs may be viewed legally, potentially influencing the liability of their members in future disputes.