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Curators may face legal risk, but contractors are just contracting. Nothing illegal about that.

In many cases, like slock.it, they appear to be the same groups on all sides (curators, contractors, token-holders), but do not necessarily disclose the relationships or voting power.

In a way, this is like Uber or Airbnb, you can't ask permission or you'd be out of business before you managed to change the laws. Asking forgiveness is not only easier than asking permission, sometimes it's the only viable route.

They may lose money, they may make some. But it's a grand experiment of a kind that's never been tried before and I'm curious to see the results.

Uber runs up against municipal taxi regulators. The DAO runs up against the SEC, DOJ, and state securities regulators, just to focus on the US cops. These people are a bit more serious than the City of Austin transit authority. As we've already seen in multiple cases, e.g., SatoshiDice, US regulators are aware of efforts to use profit-sharing contracts to raise funds, and view this (correctly) as a securities offering that should be registered unless there's a valid exemption. I was on a train some months ago and saw Preet Bharara reading the WSJ. At least I'm pretty sure it was him. How long do you think before a failed DAO crowdfunding ends up on the WSJ front page? If investors lose $100mm you can bet it will get that kind of publicity. Then it's just a matter of identifying the ideal defendant for symbolic punishment. If I were involved in slock.it, I would be careful not to travel through the US.

Mulitply this times (countries in the world) and you got a legal abyss the DAO is looking into.

At least german authorities will be interested since Slock.it UG is registered there.

NB: They do not even have a website that is conformant with german law. This is not a big deal, however, it does not strengthen my confidence that these guys are able to create code able to manage a few hundred million dollars crowdfunded capital.

The DAO exists outside of the laws of the United States. If the US curators are arrested, they will be replaced with non-US residents.

This is the fundamental premise of decentralized systems. They are resilient to the interventions of governments. Bitcoin is definitely illegal in many places in the world, and occupies something of a gray area in the US. Yet, it operates just fine.

You've obviously never heard of extradition have you?

The US doesn't rule the world (yet).

We don't and never will. Does that mean that US law is irrelevant? From from it.

US law is not applicable in some countries, because they maintain independence from the US legal system.

Yes - US law is pretty irrelevant for most people who live outside the US and who don't do business with the US.

How relevant is China's law for an US citizen who doesn't leave the country?

No country is going to extradite one of its own citizens for selling a financial product that doesn't happen to be approved by the US SEC and isn't a ponzi scheme / scam (the DAO may be a lot of things, but it is likely not an explicit confidence scheme). Not to mention the fact that there are plenty of countries who won't extradite to the US for any reason.

Not to mention the fact that there are plenty of countries who won't extradite to the US for any reason.

Try setting up a business in one of them and let me know how you like the environment.

You're missing the point. The DAO does not care about the business climate of any particular country. The curators can reside in any country in the world and finance any company anywhere in the world.

So, set up in a repressive place with no extradition to the US, and see how well the "we operate under magical Internet law, it means you can't touch us" defense works there.

Are you serious? Take a look around eastern europe. Take a look at international pharmacies that ship prescription drugs into the US. Take a look at chinese labs that ship research chemicals (recreational drugs) into the US.

There are tons of examples of this happening in practice, in the real world, right now. All you have to do is look.

But I am speaking exactly of the scenario where a dao project curator/contractor is perpetrating a financial crime. In that case, most countries would in fact extradite. If that's even necessary. I mention US laws not b/c I'm in favor of US imperialism but b/c I am familiar with these laws. I'm sure that there are other relevant jurisdictions that would frown upon financial crimes regardless of new age window dressing.

I don't think it's clear that the DAO represents a 'financial crime'. Especially not on the part of the curators. It is an unregulated, unlicensed investment vehicle, but it's certainly not predatory, and especially not on the part of the curators (who are the only arrestable individuals).

The problem as I see it is that a curator could be affiliated with a contractor, and the same person could also hold a large stake of tokens. At some point the dao is not truly decentralized, and the parties with the power to influence voting decisions for their own benefit do not disclose this conflict.

Ya that's certainly a possibility. Of course, in such a situation, the curator could be fired. However, you face the same issue in any publicly traded corporation, but with even less recourse for the shareholders.

Don't get me wrong, even though i'm invested in the DAO a bit, I fully expect there will be serious disasters like this along the way. I'm not blind to how overwhelmingly likely it is that at least some people will run off with at least some of the money they get. But I do think these issues will get shaken out over time. And then we'll simply be left with: is it a good idea to let the wisdom of crowds make investment decisions? (also, likely the answer here is an emphatic: no, but it'll be interesting to find out).

I don't know about the law of other countries, but my home country (Austria) does not extradite its own citizens, no matter what the crime is. However, it is possible that you end up in front of an Austrian court, even if you commited the crime in another country. This will only happen in cases where the crime is actually a crime in Austria. Furthermore, the court will use Austrian law, so US law would be quite irrelevant in that case.

There might be an exception when the extradition request is issued by an EU country, but I'm not sure how this would be handled. Afaik the EU requires member states to extradite citizens and non-citizens to other member states. However, (afaik) the law that prevents Austria from extraditing its own nationals is at the constitution level.

Austrian citizens are subject to arrest and direct surrender to other EU states under execution of a European Arrest Warrant without extradition, since 2002. See http://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX%3A3...

Austria did reserve the limited possibility of refusing enforcement of EAWs on its citizen for acts not punishable under Austrian law, but that's it; which is not much different from the optional non-execution provision available to all EU states.

It also has bilateral extradition treaties with other non-EU states including the USA, again, with some reservations for its own citizens. But to say Austria doesn't extradite its citizens is wrong. For most crimes, any other EU state can issue a warrant and have Austrian citizens arrested and summarily removed without any full-blown extradition proceeding.

That's why I mentioned that I'm not sure about extradition to other EU countries. Extradition of its own citizens to other non-EU countries is currently not possible.

The law for this is "§ 12 ARHG Verbot der Auslieferung österreichischer Staatsbürger" which is part of the Austrian constitution: http://www.jusline.at/12_Verbot_der_Auslieferung_%C3%B6sterr...

https://books.google.com/books?id=0H5XqvUu3B4C provides an English explanation of that law:

1173. Extradition of Austrian nationals is not admissible pursuant to Article 12, paragraph 1 of the ARHG. The authorities mentioned that this provision has the rank of a constitutional provision and, as such, requires a 2/3 majority of Parliament to be amended. Nevertheless, as of January 1, 2009, Austria will be in a position to extradite its own nationals to other EU-Member States in accordance with Section 5 EU-JZG.

1174. Where extradition for ML is denied on the sole ground of nationality, the Austrian courts are competent under Article 65, paragraph 1, no. 1 of the StGB (jurisdiction over acts committed by Austrians abroad) and must conduct the proceedings in the same way as for any other criminal offense under national law. The Austrian courts also have explicit jurisdiction over terrorist acts and terrorist financing when the perpetrator is Austrian (Article 64, paragraph 1, nos. 9 and 10 of the StGB).

The "dao" here is not designed in a way that is truly decentralized. It is susceptible to certain centralizing flaws. There could be a dao that is designed in a way that resists censorship, that would be more interesting.

> you can't ask permission or you'd be out of business before you managed to change the laws.

That strategy didn't work out too well for Zenefits.

But it has worked out for others. Risks are still risks.

It's a matter of degree. It might be a good risk to run a licensed recreational pot business in Colorado. Technically you're committing a federal crime, but there's a non-enforcement policy and as long as there's safety in numbers and a D in the White House you're probably OK. However, it's a bad idea to run a recreational cocaine business in any state. Requires a knowledge of the specific regulators, their views, and unofficial policies, to get this kind of decision right. Bringing this back to bitcoin-land, it seems that many bitcoin exchanges have knowingly operated without required state licenses for some years. However, the founders are not in jail. Why not? I think they have taken a considered approach to "partial" compliance, working out informal agreements with state regulators for eventual compliance, and avoiding operations in states that take a more hardline view. Eventually the top exchanges like Coinbase will get whatever licenses they need to, just a matter of time and $$$.

Yes, it comes down to risk management and decision making under uncertainty. i.e. how much of a competitive advantage can we gain by pushing the regulatory limits, and what are the potential downsides and probability associated with such downsides.

PG has expressed a view that he favors start ups that push regulatory boundaries, but I'm sure his view is more nuanced than such a blanket statement.

yes, risk is risk. Anyone in the cryptocurrency space is well aware of the fact that tomorrow we could all wake up with a 0 balance. As for the legal aspect, the creators and curators have been assailed on all sides by critics and naysayers from the beginning, and yet they move forward. They either understand the risks, and deem it worthy, or are just plain stupid. Given the credentials of the individuals involved, I doubt it's the latter.

All investments carry risk. Thankfully, permissionless innovation platforms don't care what governments think. If it turns out that governments do try to ban DAOs, we'll just need to enhance their privacy.

That is an interesting thing to say, so because the DAO acts as one entity, one could easily rely on a Reg S + Reg D exemption to get around pesky US laws. Reg S because the dao would be a foreign entity, and Reg D because it would be a private placement with only one investor.

So no disclosure laws necessary!

And honestly nobody in the international community cares about other country's securities laws. You can copy and paste some small exemption text from bank's private placements, so something for the UK, Hong Kong, Japan to make it also exempt.

The DAO itself relies on sanctioning from Switzerland just like Ethereum, so I'd say all the bases are covered, until it gets challenged.

But individual liability for all parties is pretty mitigated from the threat of securities regulators.

Which prison do they go to?