The U.S. District Court of California has ruled that Lido DAO, a cryptocurrency staking platform, can be considered a general partnership according to state law. The court’s decision grants legal personality to Lido DAO and classifies it as a general partnership, rejecting claims that it lacks legal personality and holding DAO participants liable despite Lido’s decentralized structure.
Furthermore, the court ruled that participants who manage the operations of the DAO benefit from its management and operations and that Lido cannot evade liability due to the absence of direct token sales. The court also determined that while Lido DAO did not directly sell tokens, its advertising and promotion of tokens through cryptocurrency exchanges constituted a sale of securities.
Judge Vince Chhabria of the U.S. District Court for the Northern District of California, in his decision, stated that this case raises important questions regarding the ability of individuals in the crypto space to exempt themselves from liability by creating new regulations to profit from exotic financial instruments. He emphasized that under state law, Lido DAO qualifies as a partnership when two or more individuals co-own a for-profit business, regardless of their intention to form a partnership.
This ruling sets a precedent for how profit-oriented DAOs’ legal status and the liability of their members should be addressed. The court documents reveal that the plaintiff, Andrew Samuels, filed a class action lawsuit alleging that he suffered losses after purchasing LDO tokens on the secondary market through the Gemini exchange in April and May 2023. These tokens were sold to him as unregistered securities. The court accepted Samuels’ claims and held Lido DAO accountable for the decrease in the value of the LDO token.
*This translation is not investment advice.