Non-Fungible Insights: Blockchain Decrypted

On November 18, 2024, in Samuels v. Lido DAO, the United States District Court for the Northern District of California denied some defendants’ motions to dismiss, finding that the plaintiff sufficiently alleged that a decentralized autonomous organization (DAO) is a partnership under California law, and consequently that these defendants may be liable as general partners. The court relied chiefly on the plaintiff’s argument that these defendants “meaningfully participated” in the DAO’s governance.

On September 22, 2022, the Commodity Futures Trading Commission filed a complaint against Ooki DAO, a decentralized autonomous organization, and its members for (i) offering to enter into and executing leveraged retail commodity transactions outside of a registered futures exchange, (ii) failing to register as a futures commission merchant, and (iii) failing to implement know-your-customer and customer identification program procedures as required of FCMs under the Bank Secrecy Act. Concurrent with the complaint, the CFTC published a settlement order against the individual founders of bZeroX, LLC for the same violations.

DAOs (Decentralized Autonomous Organizations) can offer procompetitive benefits, such as increased efficiencies and lower costs, to members of these organizations, as well as to consumers. In the rush to market, however, it is important not to overlook antitrust risks.