TechFlow news, November 19 — According to Decrypt, a U.S. federal court for the Northern District of California ruled that Lido DAO can be considered a general partnership under state law.
The court rejected Lido's argument that it is not a legal entity, classifying it as a general partnership and setting a precedent for how profit-driven decentralized autonomous organizations (DAOs) may be treated.
The court also determined that identifiable participants in Lido DAO are involved in managing its operations, meaning they cannot evade liability through their decentralized structure. According to court documents, Paradigm Operations, Andreessen Horowitz, and Dragonfly Digital Management were named as general partners due to alleged active participation in Lido’s governance and operations. However, another Lido investor, Robot Ventures, was dismissed from the case due to insufficient allegations of active involvement.
Miles Jennings, General Counsel and Head of Decentralization at a16z crypto, stated in a press release that the judge’s decision "is a major blow to decentralized governance." He noted that under the ruling, any participation in a DAO—even posting on a forum—could be enough to hold members liable under general partnership law for the actions of other members.
