Bancor DAO Loses Case Due to Court Absence

A federal court in Texas, USA, issued a default judgment against Bancor DAO, which managed the eponymous DeFi platform.

The decision to close the case resulted from the defendant’s failure to appear in response to a summons posted in January 2024 on the decentralized autonomous organization’s forum.

The court sided with the plaintiffs, who filed a class-action lawsuit in May 2023. They accused Bancor of deceiving investors, claiming that the protocol concealed liquidity issues that arose in 2022 and provided false information about the effectiveness of the impermanent loss protection (ILP) mechanism.

The plaintiffs stated that the ILP operated at a deficit and was funded by launching a new version of the platform, Bancor v3. It allegedly offered high returns “without risk to users.” However, in June 2022, the project suspended the ILP, citing “hostile market conditions.”

According to the lawsuit, the Bancor token (BNT) was an unregistered security, and Bancor DAO itself was an unincorporated general partnership among vBNT token holders.

Previously, the case was closed because the protocol’s developers were not located in the United States. However, it was reopened in December 2024.

The plaintiffs claimed that the DeFi platform “appears to be unregistered in any jurisdiction and lacks a physical office, mailing address, officers, directors, or appointed agents.”

At the time of writing, the platform holds $39 million in assets locked in the protocol. According to DeFi Llama, this is 98% less than the peak value recorded in May 2021.

Back in November, a court in California classified Lido DAO as a legal entity in the form of a general partnership. This means that participants in the structure bear financial responsibility for its actions.