Californian Court Rules Lido DAO a General Partnership

Nowadays tussles between regulators, courts, and enforcement agencies are quite common in the crypto market. In the past few quarters, agencies filed cases against dozens of firms offering digital asset services. 

Most recently, a

Californian Federal Court has ruled that the decentralized body behind the Lido Staking protocol, Lido DAO, operates as a general partnership, making its participants liable under regional laws. 

The decision came following the argument that the governance structure and token holders’ involvement in Lido qualify it as a profit-driven partnership. The Lido DAO terms itself as a non-legal entity. 

The verdict came over the class action lawsuit, which pointed out that Lido sold unregistered securities.

Additionally noted that Andreessen & Paradigm were implicated for active involvement and the Robot Ventures was dismissed due to lack of sufficient evidence.

The court’s decision has been highly appreciated and demonstrates how the courts and law have a keen interest in such financial activities. Yet judgment is widely discussed in the decentralized community and moguls term this decision as a severe setback for decentralized governance. 

In the vast market, experts claim that these types of decisions are expected to hinder the growth of DAO and other related sub-products. The mandate of registering and other legal paperwork has been troubling DAO’s user base, which has remained steady in the past few quarters.

DAO to Flourish Further! 

Data available states that the growth of DAO this year remains 30 percent greater than in the previous year. The growth is not just quantitative, but an overall qualitative one has been observed.

It has been argued that the surge in usage of DAO has been solely supported by the surge adoption of decentralized models and crypto worldwide.

Almost every developing, developed, and under-developed nation has seen a staggering growth in the number of crypto holders, Bitcoin remains the most adopted followed by Tether and Ethereum.

A research report published in April this year notes that DAO succeeded in surpassing major milestones of $4 billion, collectively managing more than $4 billion, marking a surge of 50 percent compared to the previous.

As per the membership engagement metric, participation in DAO activities is 2x, with active members surpassing 500k globally. The recorded nourishment underscores a dedication to participatory governance and decentralized decision-making.

In 2024, around 60 percent of newly debuted DAOs are focusing on areas such as sustainable technology and DeFi. This shift highlights a deliberate focus on global priorities, including environmental sustainability and promoting financial inclusion.

If the pace of growth continues in the coming times DAOs are expected to soon reach a new milestone surpassing the previous milestone.