A former investor has filed a category motion lawsuit towards Lido DAO in a District Court docket of San Francisco.
The plaintiff, Andrew Samuels, a Solano County, California resident, has filed a lawsuit over the potential mismanagement and distribution of Lido tokens. The lawsuit claims that the Lido token is successfully an unregistered safety, thereby making Lido DAO, together with a number of enterprise capital and funding administration companies, accountable for the monetary losses incurred by the plaintiffs as a result of token’s decline in worth.
Within the lawsuit, Samuels emphasizes {that a} vital majority, roughly 64%, of Lido tokens are within the arms of a choose few founding members and early-stage buyers. These entities embody notable enterprise capital companies similar to Paradigm, AH Capital Administration, Dragonfly Digital Administration, and Robert Ventures. This focus of token possession, the plaintiff argues, has marginalized the affect of standard buyers on the governance and decision-making processes throughout the Lido ecosystem.
Problem for Lido
The narrative of the lawsuit delves into the origins of Lido DAO, which initially emerged as a common partnership comprising institutional buyers. Over time, the group shifted its technique to supply what’s known as a ‘potential exit opportunity’ for these buyers.
The shift led to the general public sale of Lido tokens, facilitated by their itemizing on centralized cryptocurrency exchanges. It’s asserted that this transfer attracted investments from a wide selection of buyers, together with the plaintiff, however subsequently led to a downturn within the token’s market worth, leading to substantial losses for these buyers.
The lawsuit additionally claims that Lido tokens might qualify as securities as a result of a central group manages them and that buyers bought them with expectations of revenue, primarily influenced by the actions and selections of this central group.
If confirmed, the lawsuit makes some daring claims, which may create vital challenges for the DAO. Lido is without doubt one of the main liquidity staking protocols available in the market, with its TVL lately hitting an all-time excessive of $22 billion.
On the time of writing, the DAO has but to launch an announcement on the problem.
