{"id":118365,"date":"2024-09-27T05:17:00","date_gmt":"2024-09-27T03:17:00","guid":{"rendered":"https:\/\/ceadigilaw.org\/como-explicarle-al-juez-que-una-dao-no-puede-ser-demandada\/"},"modified":"2026-07-17T20:33:39","modified_gmt":"2026-07-17T18:33:39","slug":"como-explicarle-al-juez-que-una-dao-no-puede-ser-demandada","status":"publish","type":"post","link":"https:\/\/ceadigilaw.org\/en\/blog\/como-explicarle-al-juez-que-una-dao-no-puede-ser-demandada\/","title":{"rendered":"How to explain to the judge that a DAO cannot be sued"},"content":{"rendered":"

Antonio Tejeda Encinas<\/a><\/strong>. <\/span>
\nCEO Meta Channel Corp Europe<\/a><\/strong>. President Comite Euro Americano Digital Law<\/a><\/strong><\/span><\/p>\n

The evolution of DAOs (Decentralized Autonomous Organizations) has posed interesting challenges to the traditional legal framework. In a legal system based on the legal personality of entities such as companies, the introduction of decentralized models that operate through smart contracts and blockchain protocols has generated considerable debate about their liability and their capacity to be sued.<\/span><\/p>\n

The case at hand, that of Lido DAO, perfectly exemplifies this problem. A California judge is in the position of determining whether an LLC (Limited Liability Company) designated by a DAO can appear in judicial proceedings as a representative of the DAO, or whether the lawsuit must be dismissed due to the decentralized organization’s lack of legal capacity. What is at stake is, in essence, whether a DAO can be considered a general partnership and, therefore, capable of being sued in jurisdictions where legal responsibilities are assigned to it.<\/span><\/p>\n

The legal personality of DAOs: a fiction in dispute:<\/span><\/strong>
\nThe general theory of companies in law allows us to grant legal personality to entities that, in essence, are groups of people who join efforts in pursuit of a common goal. This legal fiction has been a fundamental pillar in the development of the modern economy, allowing partnerships and corporations to act as a single unit before the law. However, in the case of DAOs, the very structure of these organizations conflicts with this traditional notion.<\/span><\/p>\n

Over the more than five years I have been studying the DAO phenomenon, I continue to be surprised by the number of challenges they pose to the legal system. In particular, the present case highlights the difficulty of fitting a DAO within existing legal categories. Lido DAO, as a DeFi (decentralized finance) platform, allows users to participate in Ethereum staking without the need to lock up their ETH tokens. On April 3, 2024, a class action lawsuit was filed against Lido DAO, characterizing it as a “general partnership” operating in the Ethereum staking business, and alleging that LDO tokens are securities that the DAO unlawfully offers to the public.<\/span><\/p>\n

The DAO’s procedural strategy: a legal paradox:<\/span><\/strong>
\nUp to this point, the legal conflict does not seem out of the ordinary. Several lawsuits have been filed against DAOs over the years, with varied results. What is truly fascinating about this case is the procedural strategy that Lido DAO adopts to defend itself against the lawsuit. Instead of accepting its appearance before the court, the DAO adopts a posture of “denial of capacity”. That is, it argues that a DAO, by its decentralized nature and its existence as software code, cannot be sued because it has no legal personality.<\/span><\/p>\n

This defense poses a fundamental paradox: how can a DAO claim that it lacks the legal capacity to be sued, while at the same time participating in the judicial proceedings through an LLC designated as its representative? This contradiction is precisely what is under discussion in this case, and it could set an important precedent for the legal future of DAOs.<\/span><\/p>\n

Lido DAO has designated Dolphin CL LLC to appear before the court and file a motion to dismiss the lawsuit, arguing the “lack of capacity to be sued”. However, this LLC does not act as an attorney-in-fact or formal representative of the DAO. In fact, Lido’s decision explicitly establishes that Dolphin CL LLC has no legal authority over the DAO nor does it officially represent its interests.<\/span><\/p>\n

A comparative approach, SPAIN: How would other jurisdictions react?<\/span>
\nAt this point, it is worth reflecting on how a court in other jurisdictions, such as Spain, might face a similar case. Let us imagine, for example, a Spanish judge at a preliminary hearing in a lawsuit against a DAO. What would happen if a “singular agent” designated by the DAO appeared to argue that “software cannot be sued”?<\/span><\/p>\n

This situation would challenge the conventional understanding of the judge, who, accustomed to dealing with traditional legal entities, might have difficulty understanding how an organization that actively participates in the economy, carries out transactions and manages assets in a decentralized manner, can maintain that it has no legal liability. It would be interesting to see whether Spanish courts would adopt an approach similar to that of California, or whether they would follow other criteria, perhaps influenced by the European legal framework.<\/span><\/p>\n

Final reflections and angles yet to be explored:<\/span><\/strong>
\nThis case has many interesting angles, from the application of the in pari delicto doctrine to the consideration of the legal nature of tokens and the transactions carried out by DAOs. The plaintiff, in this case, is a token holder, which introduces even more complexity to the dispute. To what extent can a token holder be considered an interested party in a lawsuit against a DAO? And, more importantly, how does this relationship affect the analysis of the DAO’s legal liability?<\/span><\/p>\n

Finally, it is worth noting that this case will not only affect Lido DAO, but will set a precedent for all DAOs operating in the DeFi ecosystem. The resolution of this case could determine how DAOs are viewed by the courts in the future, and whether they must adapt to new regulations governing their operations, or whether they will continue to operate on the margins of the traditional legal system.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Antonio Tejeda Encinas. CEO Meta Channel Corp Europe. President Comite Euro Americano Digital Law The evolution of DAOs (Decentralized Autonomous Organizations) has posed interesting challenges to the traditional legal framework. In a legal system based on the legal personality of entities such as companies, the introduction of decentralized models that operate through smart contracts and […]<\/p>\n","protected":false},"author":2,"featured_media":112283,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"wds_primary_category":0,"wds_primary_cea_women":0,"footnotes":""},"categories":[1103],"tags":[],"cea_women":[],"class_list":["post-118365","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain-crypto-assets"],"acf":[],"_links":{"self":[{"href":"https:\/\/ceadigilaw.org\/en\/wp-json\/wp\/v2\/posts\/118365","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ceadigilaw.org\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ceadigilaw.org\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ceadigilaw.org\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ceadigilaw.org\/en\/wp-json\/wp\/v2\/comments?post=118365"}],"version-history":[{"count":1,"href":"https:\/\/ceadigilaw.org\/en\/wp-json\/wp\/v2\/posts\/118365\/revisions"}],"predecessor-version":[{"id":119278,"href":"https:\/\/ceadigilaw.org\/en\/wp-json\/wp\/v2\/posts\/118365\/revisions\/119278"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ceadigilaw.org\/en\/wp-json\/wp\/v2\/media\/112283"}],"wp:attachment":[{"href":"https:\/\/ceadigilaw.org\/en\/wp-json\/wp\/v2\/media?parent=118365"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ceadigilaw.org\/en\/wp-json\/wp\/v2\/categories?post=118365"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ceadigilaw.org\/en\/wp-json\/wp\/v2\/tags?post=118365"},{"taxonomy":"cea_women","embeddable":true,"href":"https:\/\/ceadigilaw.org\/en\/wp-json\/wp\/v2\/cea_women?post=118365"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}