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Today in crypto, a United States federal judge has ruled that participants in decentralized autonomous organizations (DAOs) can be held liable for the actions of other members under state partnership laws, a letter from lawmakers to the US Treasury Department asking what is being done about Tornado Cash has surfaced, and the Options Clearing Corporation (OCC) is preparing to launch spot Bitcoin exchange-traded fund (ETF) options.
California judge rules DAO members liable under partnership laws
On Nov. 18, Judge Vince Chhabria of the United States District Court for the Northern District of California determined that governing bodies behind Lido DAO qualify as partners under California’s general partnership laws. As a result, members may not avoid liability for the organization’s actions.
The lawsuit stems from a complaint by Andrew Samuels, who purchased tokens issued by Lido DAO. The investor sued the entity to recover losses that he incurred. Samuels alleged that the tokens were unregistered securities, arguing that Lido DAO should have registered them with the US Securities and Exchange Commission.
“Samuels contends that because Lido DAO never registered the securities, it is liable for his losses under Section 12(a)(1) of the Securities Act,” the lawsuit stated.
The court ruled that Samuels adequately alleged that Lido DAO and its identifiable partners could not claim immunity. According to the filing, the judge determined that Lido DAO qualifies as a general partnership under California law, holding partners accountable.
Miles Jennings, general counsel and head of decentralization at a16z Crypto, described the ruling as a huge blow to decentralized governance.
US lawmakers demand Treasury answer what it’s doing about Tornado Cash
Several United States Democrat House members are demanding answers from Treasury officials on what is being done about the crypto-mixing service Tornado Cash, sanctioned in 2022 but remains operational.
“We write to request additional information about the ongoing use of the cryptocurrency mixing service Tornado Cash after sanctions were imposed,” stated the lawmakers, which included crypto-critic Brad Sherman, in a letter on Nov. 14.
“Despite sanctions, Tornado Cash has remained online and continues to function as decentralized smart contracts,” they added.
The lawmakers pointed out that there has been a “resurgence” in mixer usage this year, with Tornado Cash accepting $1.8 billion in deposits in the first half of 2024, a 45% increase compared to all of 2023, adding:
“This problem shows zero signs of going away anytime soon.”
OCC to launch spot Bitcoin ETF as early as Nov. 19
The US Commodity Futures Trading Commission (CFTC) appears to have cleared the way for the OCC to launch spot Bitcoin ETF options. In a Nov. 18 notice, the OCC outlined plans for the clearance, settlement, and risk management of these ETFs.
Nasdaq’s Alison Hennessy confirmed the exchange’s readiness to list and trade spot Bitcoin ETF options, potentially as soon as Tuesday, Nov. 19. This move signals increased institutional interest in cryptocurrencies, following the SEC’s approval of spot Bitcoin ETFs in January and spot Ether ETFs in May
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