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On July 11, the Lido community reached a significant decision on the Snapshot governance page, where members voted to approve a proposal to appoint a designated entity to respond to ongoing class-action lawsuits against Lido DAO. This step marks an important moment for the DAO and reflects its effective approach to directly addressing legal challenges. The class-action lawsuit, numbered 3:23-cv-06492, was filed in the United States District Court for the Northern District of California.
Lido DAO and Legal Challenges
The complaint identifies the defendant as the “general partnership known as LIDO DAO,” accusing it of running an Ethereum staking business and alleging that LDO tokens or transactions are classified as securities.
Additionally, Lido DAO is accused of violating securities laws by offering or selling these securities to the public. This lawsuit represents a significant legal hurdle for Lido DAO, potentially impacting its operations and the broader DeFi environment.
Court Decision and Lido DAO’s Response
On June 27, the court issued a critical decision, finding that it was lawful for plaintiffs to serve legal documents to Lido DAO through various public disclosures.
This decision required Lido DAO to respond within 14 days; otherwise, the DAO could face a default judgment in favor of the plaintiffs. The urgency and seriousness of the situation forced the Lido community to act swiftly.
Appointment of Dolphin CL, LLC
The proposal suggested appointing and funding Dolphin CL, LLC, a Delaware limited liability company, while not recognizing Lido DAO as a partnership, association, or other legally identifiable group or entity.
Dolphin was tasked with hiring legal counsel expected to be provided by the Brown Rudnick firm, with Stephen Palley as the lead partner. This strategic move was designed to ensure a strong defense against the allegations presented in the lawsuit.
How Will Funding Be Provided?
To facilitate this, the proposal requested funding of 200,000 DAI. This amount is expected to cover the expenses of Dolphin and the legal team, particularly for preparing, filing, and defending a motion to dismiss the claims against Lido DAO.
The community’s approval of this proposal reflects their determination to protect the DAO’s interests and continue operations amid legal scrutiny.
