ANALYSIS: DAOs May Be a New Tech Paradigm, but Not a Legal One

The recent denial of a motion to dismiss in the Compound DAO suit illustrates what may be an emerging trend of courts deciding that decentralized autonomous organizations (DAOs) aren’t novel enough to depart from existing corporate and securities principles in their legal analysis.

DAOs are blockchain-based organizations that allocate a pool of money or digital assets based on how the holders of the DAO’s “governance tokens” vote. In the crypto world, DAOs are a popular way to aggregate funds for a project. Sometimes, DAOs have a legal “wrapper,” or a filing for a limited liability company or nonprofit that uses ...