Legal Ruling Classifies Lido DAO as a Partnership, Impacting Decentralized Governance

On November 19th, a significant legal decision emerged from the Northern District of California regarding Lido DAO, as reported by Decrypt. The court concluded that Lido DAO qualifies as a limited liability partnership under state law, dismissing the platform’s argument of non-entity status. This pivotal ruling characterizes Lido as a general partnership, thus establishing a crucial legal precedent concerning the treatment of profit-oriented decentralized autonomous organizations (DAOs).

Further analysis revealed that identifiable members of Lido DAO are deemed actively engaged in the management of the organization, thereby losing protections typically afforded by decentralized governance structures. Key players, including Paradigm Operations, Andreessen Horowitz, and Dragonfly Digital Management, face liability accusations for their roles in Lido’s operational framework. Miles Jennings, General Counsel at a16z crypto, emphasized the implications of this ruling, asserting it represents a notable regression for decentralized governance, suggesting that even minimal involvement in a DAO could lead to accountability for collective actions.