In a landmark decision on November 18, a United States federal judge ruled that members of decentralized autonomous organizations (DAOs) can be held legally liable for the actions of their peers. Judge Vince Chhabria of the Northern District of California stated that DAOs, including Lido DAO, qualify as general partnerships under California law. This classification subjects members to potential liability for the organization’s activities.
The Lawsuit: Tokens as Unregistered Securities
The case originated from a lawsuit by investor Andrew Samuels, who alleged that Lido DAO-issued tokens were unregistered securities. Samuels claimed financial losses and argued that Lido DAO should have registered the tokens with the U.S. Securities and Exchange Commission (SEC).
The court sided with Samuels, allowing the case to proceed against major Lido DAO participants, including Paradigm Operations, Andreessen Horowitz, and Dragonfly Digital Management. However, Robot Ventures avoided liability due to insufficient evidence of its involvement as a general partner.
Legal Risks for DAO Members
Judge Chhabria’s decision categorizes Lido DAO as a general partnership. This classification makes its members, particularly those with identifiable roles, accountable for the DAO’s activities. The court emphasized that voting or posting in forums could establish a connection to the organization and expose members to legal claims.
Miles Jennings, general counsel at a16z Crypto, called the ruling a “major setback” for decentralized governance. He noted that even minimal participation, such as forum discussions, could lead to liability under this framework.
Implications for DAOs
The decision has raised concerns about the legal treatment of DAOs in the United States. While DAOs are designed as decentralized and autonomous, this ruling challenges those assumptions. It suggests that members could face responsibilities similar to those in traditional partnerships.
As a result, DAO participants may need to reconsider their roles and engagement. Legal experts recommend establishing protective structures, like formal legal entities, to shield members from individual liability.
The Future of Decentralized Governance
This ruling highlights the changing regulatory environment for DAOs and digital assets. Increased scrutiny may force DAOs to adjust their governance models and align with legal standards.
The decision emphasizes the importance of managing legal risks for organizations like Lido. To remain viable, DAOs may need to rethink their foundational principles and adopt measures that balance decentralization with compliance.
I am Toby Rothschild, Co-Founder of Spearmint and author at Coinography, and a strategist focused on advancing Web3 innovation, digital ecosystems, and the future of decentralized technology. I combine product thinking, creative leadership, and deep interest in emerging trends to help shape how individuals and organizations interact with the next generation of digital systems.
My work centers on understanding how blockchain, AI, and digital identity are reshaping global industries. At Spearmint, I help lead the direction of initiatives that bring clarity, structure, and meaningful user experiences to complex technological environments. I focus on bridging vision with execution, ensuring that innovation remains practical, scalable, and aligned with long-term growth.
As an author at Coinography, I create insights that translate fast-moving Web3 developments into clear, useful narratives. I explore topics such as decentralized governance, digital identity, creator economies, token models, protocol design, and the shifting cultural patterns around emerging technology. My aim is to make digital transformation more understandable and approachable for a wider audience.
I believe that Web3 is not only a technological shift but a cultural and creative one. Strong ideas, thoughtful communication, and human-centered design will shape which technologies thrive and how communities evolve around them. My writing and research reflect this belief, focusing on clarity, relevance, and long-term perspective.
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