Pryor Cashman attorney Nicholas Saady, a member of the firm's Litigation Group involved with blockchain-related litigation, spoke to Politico about the trend of decentralized autonomous organizations ("DAOs") incorporating as legal entities, and how that trend reflects uncertainty about the legal liability of DAOs and their members.
Following recent enforcement actions by the CFTC against persons and entities in the blockchain space, there's been an uptick in the incorporation of DAOs in jurisdictions including the Cayman Islands and Panama.
Nick addressed the trend in "Crypto looks to the Caymans":
Since the CFTC became the first regulator to sue an entire DAO last month, alleging it had failed to comply with commodities trading laws, the scramble to register has accelerated as DAO participants realize they are in uncharted legal waters, according to Nicholas Saady, a blockchain-focused attorney at Pryor Cashman.
The suit has raised the prospect that legal troubles could affect not just founders, but anyone who bought or voted with a group's governance tokens, signaling an urgent need for liability protection.
"It is hard for a DAO member to know when, how, for what conduct, or under what legal theory they may be held liable."
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