Issues To Watch In Decentralized Autonomous Org Case

By Andrew Balthazor and Ashley Shively (May 24, 2022, 6:13 PM EDT) — On May 2, users of decentralized finance platform bZx filed a novel putative class action against the decentralized autonomous organization, or DAO, governing the DeFi platform and related entities, seeking to hold those entities legally responsible for cyber hackers’ theft of about $55 million worth of virtual assets from the platform.

The case, Sarcuni v. bZx DAO in the U.S. District Court for the Southern District of California, presents novel questions of liability in the context of these relatively new organizations.

The term “DAO” is amorphous. Generically, DAOs are smart contract-based associations of investors who possess voting rights and thus control…

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