According to the Securities and Exchange Commission, a DAO is a "term used to describe a 'virtual' organization embodied in computer code and executed on a distributed ledger or blockchain". See Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO. That does not answer the question, however, of the legal status of DAOs. Two years ago, I wrote that U.S. District Court Judge William H. Orrick had ruled that Ooki DAO was an unincorporated association under California law. CFTC v. Ooki DAO, 2022 WL 17822445. Several months later, U.S. District Court Judge Larry Alan Burns found that the plaintiffs had sufficiently pled the existence of bXz DAO as a partnership under California law. Sarcuni v. bZx DAO, 664 F. Supp. 3d 1100 (S.D. Cal. 2023)
In the meantime, California Assembly Member Matt Haney introduced legislation, AB 1229, that would have created a bespoke decentralized nonprofit association law for California. See California Bill Would Create Decentralized Nonprofit Association Law. That bill failed to pass out of the legislature and died pursuant to Article IV, Section 10(c) of the California Constitution.
Recently, another federal judge, Vince Chhabria, has ruled that an investor has adequately alleged that a DAO is a general partnership within the meaning of California law. Samuels v. Lido Dao, 2024 WL 4815022 (Nov. 18, 2024). Citing CFTC, Judge Chhabria further found that even if the DAO is not a general partnership, the DAO still could be sued as an unincorporated association.
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