# New Court Ruling Finds Lido DAO Members Liable as Partners

*Author: Kazu Umemoto*
*Published: Nov 19, 2024*
*Source: https://www.bankless.com/lido-dao-liable-partners*

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Lido DAO members can be held liable under partnership laws, according to a [new federal court ruling](https://decrypt.co/292275/california-court-rules-lido-dao-members-can-be-held-liable-under-partnership-laws) in California. 

## What’s the scoop?
- Yesterday, a California federal court ruled that Lido DAO, the governing body behind the popular liquid staking protocol Lido, can be treated as a general partnership under state law.
- The court dismissed Lido’s argument that it is a non-legal entity, holding its members liable despite the DAO's decentralized nature. The court cited token holder involvement in decision-making and earning staking rewards as evidence of co-ownership of a profit-driven business.
- Venture firms including Paradigm Operations, Andreessen Horowitz, and Dragonfly Digital Management were implicated as general partners, with the case stemming from a class-action lawsuit filed by Andrew Samuels, who claimed Lido’s native LDO tokens were sold to him as unregistered securities. 

## Bankless take: 
The California court ruling that Lido DAO members could be held liable under partnership laws raises significant concerns for decentralized organizations. The court has established a precedent that decentralization alone doesn’t shield participants from liability.

Furthermore, the ruling challenges the assumption that DAOs operate outside traditional legal frameworks and could set a precedent for similar cases, reshaping the legal landscape here. If this ruling stands, DAO members face increased legal exposure, which could impact their decision-making and cause a broader shift toward more regulated approaches like [the Wyoming DUNA](https://a16zcrypto.com/posts/article/duna-for-daos/) model. 

> Today, a California judge dealt a huge blow to decentralized governance.Under the ruling, any DAO participation (even posting in a forum) could be sufficient to hold DAO members liable for the actions of other members under general partnership laws.It's time to DUNA. [pic.twitter.com/aKNBY7pfc9](https://t.co/aKNBY7pfc9)— miles jennings (@milesjennings) [November 19, 2024](https://twitter.com/milesjennings/status/1858720755523219932?ref_src=twsrc%5Etfw)
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