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Saady Comments On Current Issues Regarding DAO Liability And Litigation – Fin Tech

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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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