According to news from Reuters on December 2, 2024, the coin industry is hoping for a new administration that may take a lighter approach to regulatory enforcement policies. However, at this time, federal courts still have a rather skeptical view of certain segments within the industry, especially decentralized autonomous organizations (DAOs).
In a recent ruling on November 18, Judge Vince Chhabria of San Francisco determined that a DAO could not only be held responsible for the sale of unregistered securities but that the venture capital funds supporting this DAO could also face claims from investors. Notably, some major altcoin organizations like Lido DAO may face legal liability because its organizational model is considered a form of general partnership - where profits from staking on the Ethereum blockchain are distributed to token holders.
Additionally, the court concluded that large investment funds such as Paradigm, Andreessen Horowitz, and Dragonfly Capital may be held liable as members of a general partnership for promoting the sale of Lido DAO tokens as unregistered securities, violating U.S. Securities Law.
Investment funds have put forward arguments against this ruling, claiming that Lido DAO is not structured as a partnership and that no funds were involved in the creation or sale of governance tokens. However, Judge Chhabria's ruling dismissed these arguments, stating that the ultimate goal of the DAO - the distribution of staking profits - was sufficient to define its structure as a general partnership.
This ruling is certainly not the final word in the lawsuit, but it emphasizes that the crypto industry still faces many legal challenges as U.S. law increasingly pays attention to new and complex financial models in the sector.
Source: Reuters
