A federal court in California ruled that the Lido DAO, which manages a popular liquid staking protocol, can be classified as a general partnership under state law. This ruling challenges Lido's argument that it operates as a non-legal entity. The court determined that identifiable participants in the DAO were actively managing its operations, and thus could be held liable for actions taken within the decentralized structure. Notably, Dragonfly Digital Management was implicated as a general partner due to its involvement, while Robot Ventures was dismissed due to lack of sufficient evidence of participation. The case stemmed from a lawsuit filed by Andrew Samuels who claimed Lido DAO sold unregistered securities, leading to his financial losses. The court concluded that Lido's governance structure, where token holders manage decisions and share in staking rewards, meets the criteria for general partnership under California law, thereby leaving participants exposed to liability even without direct token sales.

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