Dao Liability
13-02-2023
- url: https://www.youtube.com/watch?v=FOizKZByy4w
- regulators:
- SEC says DAO tokens are securities. This means AML, KYC and other securities laws
- CFTC says DAO governance is an unincorporated association. This means joint and several personal (unlimited) liability
- IRS comes down hard if you’re skirting jurisdictions trying to offshore US activity.
- legal cases:
- hacks or breaches on exchanges and protocols involving DAOs or DAO-based tokens resulting in class action lawsuits against the token holders etc
- DAOs don’t dispute legal allegations (firstly because they’re generally disorganised, and secondly because why would you defend your case if you’re the first in line to pay for everyone else if you lose).
- The judge issues a default against the case. Plaintiffs then enforce the ruling and seek out DAO members to repay damages, usually looking for most liquid token holders or must publicly visible token holders.
- the ideals of crypto governance take a back seat to real-world contracts law
- examples referenced include:
- Ooki DAO (served via chatbot and forum message 😂)
- charged with running an unregistered crypto futures trading facility and failing to conduct proper know-your-customer checks
- Mango DAO
- charged with manipulating the price of Mango Market’s governance token
- Ooki DAO (served via chatbot and forum message 😂)
- comments on innovation:
- the video referenced this academic book, which talks of new technological developments challenging existing legal frameworks. This pushes innovation to the fringes until some systemic turning point arises usually in the form of a bubble, after which there is institutional recomposition.