Enforcement will be the interesting part. If a DAO has anonymous members and no LLC or corporate structure associated with it, then a court can rule that the members are liable, but it could be very difficult to enforce that liability.
[1] https://www.banklesstimes.com/news/2023/03/08/off-chain-gove...
Edit: I'm posting too fast, so here's an edit for a reply
I don't know anything about Ethereum DAOs. Check out Tendermint chains (Cosmos, Osmosis, Crescent, Stargaze, EVMOS, Kava). Gas is cheap and all voting is on-chain. Governance discussions happen mostly on a forum called Commonwealth and then they're put on chain and voted on by validators and stakers.
> To circumvent the very high gas fees associated with full on-chain governance, Decentraland’s DAO uses a combination of free, off-chain voting for the community and a multi-sig wallet controlled by a “DAO Committee” to enact those off-chain decisions on the Ethereum blockchain.
I'm not a huge follower of the crypto ecosystem and DAOs, but this kind of thing seems like it's pretty common.
It's an in depth look/critique.
> a multi-sig wallet controlled by a “DAO Committee” to enact those off-chain decisions
DAOs may empower a multi-sig with certain allocated funds to spend according to a mandate. This is ok. It's like saying America is not a democracy because regulators can make new rules that congress is not voting on.
It also possible to have off-chain voting, but still enforce those results on-chain using a fraud-proof like system, and some do this. Lots of design space to play with.
That actually does appear to be the opinion of the current supreme court, and you can expect further rulings counter to historical precedence WRT chevron deference.
https://www.theblock.co/post/219214/peopledao-hacked-via-goo...
The default form of legal structure for a cooperating group of people is general partnership--unless you take specific legal steps to avoid forming a general partnership, that is how the courts will view the partnership. General partnerships means that all partners are jointly and severally liable.
In layman's terms, that means you just have to find one person involved in the DAO, and sue them, and then you get to collect the full judgement from that person (alone), and it's now their problem to get cooperation from the other partners for the liability.
(If this sounds like a terrible idea, it is. That's why there exists all sorts of fancy legal structures that avoid putting people in this position. But if you're not going to use any of them, you get the terrible idea instead!)
Directly, the holders of the DAO tokens. That’s what this case is about. Those holders may have further claims against the people who implemented the code or AI. But the liability begins with the general partners, i.e. holders of the governance tokens.
Will be interesting to see the first judgements enforced against holders of a DAO.
Which, in this case, are the bag-holders. Looks like there are benefits to having a real corporation, instead of trying to re-invent corporate governance from scratch, without any input from the courts...
You can't just wind up a toy with a bomb strapped to it, walk away, and disclaim the consequences; nor can you do that with code.
What if the last 'person' was gpt4? is openai responsible?
Things do get murky when there isn't a lot of existing precedent. That's why it's risky to engage in activities that are, let's just say "legally innovative."
If you make an AI that is hooked up to the internet and it does something criminal, you'd be liable. You can't just let your pitbull roam the streets and not be held liable when it bites someone.
When then is responsible for the tornado cash instance? The Ethereum VM node operators who have no idea they're even running it? An unknowable person from Somalia?
A deceased person.
> What happens when the AI spawns more AI, who is responsible for that?
The creator of the first copy.
For example: Imagine I have a cow, and the cow escapes and goes on a rampage. I didn't make the cow escape, I didn't tell it to go on a rampage, and cows think for themselves so are autonomous.
That doesn't mean I get to claim the cow is liable for the damage.
Thsoe will likely make daos more useful, but less differentiated from existing structures
The question is whether it is a general partnership or not, and by the rules listed it would appear to be.
Collective ownership implying collective liability is not novel or new, and existed long before LLCs and LLPs did. Legislation allowing those is relatively recent because it has obvious benefits, but comes at the cost of some degree of regulation. In the true crypto spirit of "regulation == bad" this DAO took the path of not making itself an LLC or LLP (and in fact explicitly terminated the LLC), which means it seems fairly obvious that it's a general (e.g. unlimited liability) partnership as the court appears to be concluding.
That's partly what makes these individuals an unincorporated organization.
Everyone in a mining (or staking) pool seems more likely to count as a general partnership.
Miners (staker?) aren't partners in the DAO: being a miner doesn't make you an owner of anything, anymore than being an employee or contractor to a partnership in the real world would make you liable for the actions of your employer/client.