Reuters: What Are DAOs And Why Are They Legally Vulnerable?

July 21, 2022

O’Melveny partner William K. Pao spoke with Reuters on the topic of Decentralized Autonomous Organizations, or DAOs, discussing how they operate and why they could be exposed to liability claims. “There are no senior executives or centralized authority running the project. It is a project primarily run by smart contracts, and really, it is meant to be run by the community. It is not a top-down organization, but bottom-up,” Pao said. “When you are a user of these protocols and you sue the DAO, it is possible that you may be suing yourself. In many cases when we are talking about these protocols and the issuance of governance tokens, the holding of governance tokens makes you a member of the DAO. It could very well be that these plaintiffs are governance holders themselves and members of the DAO, and could be on both sides of the ‘V’ here.” 

Reuters subscribers can watch the video here.