Hacker News Reader

Comment by will_brown | Hacker News Reader

When DAO originally made the HN Front page I made this comment [1] calling DAO snake oil and suggested people could lawfully operate their own "DAO" as an Investment Club LLC, specifically Investment Clubs can be exempt from securities laws [2] subject to the restrictions I outlined in my prior comment such as a limit of "100 tokens" (i.e. 100 members to make future investments).

[1] https://news.ycombinator.com/item?id=11707497

[2] https://www.sec.gov/reportspubs/investor-publications/invest...

View on HN

It's a decentralized and autonomous application. How could an autonomous application on the blockchain be an LLC?

I actually addressed this question a year and a half ago as well [1], where I defined the DAO as blockchain based Investment Club Software. In otherwords what you are calling the "autonomous application", that wouldn't be the LLC but the Software that manages the Investment Club LLC. Note: the Wikipedia article for "investment club software" that I originally linked to no longer appears to exist.

[1] https://news.ycombinator.com/item?id=11711499

So it's the shareholders who are responsible for forming an LLC? How can they prevent non-members from becoming partners in the DAO, given the software is autonomous and has no permission controls?

First LLC's don't have "shareholders" the owners/equivalent of an LLC is a Member.

The process would basically be as follows:

Say you form an Investment Club LLC, you create a smart contract/ICO with up to 99 tokens, and purchasers of the ICO tokens become a "member" of the LLC.

Thereafter, the Investment Club LLC members could create a smart contract/investment opportunity, but you would only be able to vote/invest if you are a token holder...you say there are no permission controls but this was exactly how the DAO was marketed to function, buy a Token for DAO and you could participate/vote on future DAO investment opportunities.

So you're suggesting that instead of Slock.it developing the smart contract, an LLC should have? How do the token buyers qualify as members of an LLC when they're anonymous buyers with no legal affiliation to a LLC? Or are you saying the LLC wouldn't be a traditional one with a legal identity and identification of its members?

Reply on news.ycombinator.com