US Court Holds Lido DAO Members Accountable for Organisational Activities

A court in California has classified the decentralised autonomous organisation (DAO) managing the Lido liquid staking protocol as a legal entity in the form of a general partnership.

Under state law, members of such a structure bear financial responsibility for its actions.

The case originated from a lawsuit by Andrew Samuels, who purchased tokens issued by Lido DAO. The investor claimed that the assets were unregistered securities and held key DAO partners—Paradigm Operations, Andreessen Horowitz (a16z), Dragonfly Digital Management, and Robot Ventures—responsible for his losses.

The listed companies filed motions to dismiss the case. However, the court granted only one, finding that Samuels did not provide sufficient evidence regarding Robot Ventures’ role.

The court recognised Paradigm, Andreessen Horowitz, and Dragonfly as members of the general partnership due to their involvement in Lido DAO’s management and operations.

Miles Jennings, General Counsel at a16z Crypto, described the precedent as a “huge blow to decentralised governance.”

Today, a California judge dealt a huge blow to decentralized governance.

Under the ruling, any DAO participation (even posting in a forum) could be sufficient to hold DAO members liable for the actions of other members under general partnership laws.

It’s time to DUNA. pic.twitter.com/aKNBY7pfc9

— miles jennings (@milesjennings) November 19, 2024

According to the expert, the ruling implies that even forum posts within a DAO could be enough to hold a member accountable for the actions of other participants.

Back in March, authorities in the state of Wyoming legalised DAO operations as non-profit organisations with legal status.