The U.S. District Court of California has ruled that Lido DAO, a cryptocurrency staking platform, can be considered a general partnership under state law. According to Decrypt, the court determined that Lido DAO has legal personality and should be classified as a general partnership. The court dismissed arguments that Lido DAO lacked legal personality and held that participants in the DAO would be held liable despite its decentralized structure. Additionally, the court found that participants who managed the DAO’s operations benefited from its management and operations, and Lido DAO could not escape liability due to the absence of direct token sales. The court further ruled that although Lido DAO did not directly sell tokens, its advertising and promotion of tokens through cryptocurrency exchanges constituted a sale of securities. In his decision, Judge Vince Chhabria of the U.S. District Court for the Northern District of California stated that this case raises important questions about the ability of individuals in the crypto space to exempt themselves from liability by creating new regulations to profit from exotic financial instruments. Under state law, Lido DAO is considered a partnership when two or more individuals co-own a for-profit business, regardless of their intention to form a partnership. This case sets a precedent for how profit-oriented DAOs’ legal status and the liability of their members should be addressed. The court documents show that the plaintiff, Andrew Samuels, filed a class action lawsuit claiming that he purchased LDO tokens on the secondary market through the Gemini exchange in April and May 2023. However, he incurred losses in December of that year when he bought the platform’s native LDO tokens, which were sold to him as unregistered securities. The court accepted Samuels’ claims and held Lido DAO responsible for the decline in the value of the LDO token. Please note that this translation does not constitute investment advice.
