2 ms·

Why would it be difficult to enforce individual liability? The DAO needs to interact with the outside world somehow, pay bills and get paid etc, and distribute

Why would it be difficult to enforce individual liability? The DAO needs to interact with the outside world somehow, pay bills and get paid etc, and distribute income to members, so you can just follow the money, can't you?

orbz 4y ago
Jurisdiction of the enforcing party must have overlap with the individual members targeted. In practice I would expect any member under that jurisdiction would bear full responsibility of the actions of any of the collective members.
WorldMaker 4y ago
If you assume a DAO is de facto a corporation/partnership (as this court decision suggests), most US States (including California, which is relevant to this specific case) and many countries start from an unlimited, collective liability default for corporations/partnerships and limited liability is the properly registered (and taxed!) opt-in. (The article also points to states that are not California that realize this and have started to offer easy LLC opt-in for DAOs. Presumably in part because it is a potential tax revenue source.) [IANAL, but this is fascinating.]
- olliej 4y ago
  It is an organization, there is no question there. The question is whether it is a general partnership or not, and by the rules listed it would appear to be. Collective ownership implying collective liability is not novel or new, and existed long before LLCs and LLPs did. Legislation allowing those is relatively recent because it has obvious benefits, but comes at the cost of some degree of regulation. In the true crypto spirit of "regulation == bad" this DAO took the path of not making itself an LLC or LLP (and in fact explicitly terminated the LLC), which means it seems fairly obvious that it's a general (e.g. unlimited liability) partnership as the court appears to be concluding.
_navierstokes 4y ago
Sometimes you can't follow the money, because the DAO members can use privacy tools to hide the coins, similar to what Tornado Cash allowed you to do.

orbz 4y ago

Jurisdiction of the enforcing party must have overlap with the individual members targeted. In practice I would expect any member under that jurisdiction would bear full responsibility of the actions of any of the collective members.

WorldMaker 4y ago

If you assume a DAO is de facto a corporation/partnership (as this court decision suggests), most US States (including California, which is relevant to this specific case) and many countries start from an unlimited, collective liability default for corporations/partnerships and limited liability is the properly registered (and taxed!) opt-in. (The article also points to states that are not California that realize this and have started to offer easy LLC opt-in for DAOs. Presumably in part because it is a potential tax revenue source.) [IANAL, but this is fascinating.]

olliej 4y ago
It is an organization, there is no question there. The question is whether it is a general partnership or not, and by the rules listed it would appear to be. Collective ownership implying collective liability is not novel or new, and existed long before LLCs and LLPs did. Legislation allowing those is relatively recent because it has obvious benefits, but comes at the cost of some degree of regulation. In the true crypto spirit of "regulation == bad" this DAO took the path of not making itself an LLC or LLP (and in fact explicitly terminated the LLC), which means it seems fairly obvious that it's a general (e.g. unlimited liability) partnership as the court appears to be concluding.

_navierstokes 4y ago

Sometimes you can't follow the money, because the DAO members can use privacy tools to hide the coins, similar to what Tornado Cash allowed you to do.