Lido DAO faces class action: investor alleges unregistered security and losses

Lido DAO faces class action: investor alleges unregistered security and losses

user avatar

by Liza Tanasova

3 years ago


In a class-action lawsuit filed in a San Francisco court on December 17, a Lido token holder, Andrew Samuels, has accused the liquid staking protocol's governing body, Lido DAO, of being an unregistered security and held it responsible for the decline in the token's price. Samuels claims that 64% of Lido tokens are controlled by venture capital firms, including Paradigm, AH Capital Management, Dragonfly Digital Management, and Robert Ventures, leaving ordinary investors with no meaningful influence on governance matters. Lido DAO, which oversees the liquid staking protocol allowing users to delegate Ether and earn staking rewards, is now facing legal scrutiny for its token's alleged security status and the losses incurred by investors due to its price decline.

The lawsuit contends that Lido DAO initially functioned as a general partnership of institutional investors but later opted for a potential exit opportunity. To facilitate this, it purportedly convinced centralized exchanges to list Lido tokens, leading to purchases by investors like Samuels. The subsequent decline in token prices is cited as the cause of financial losses for these investors, with the lawsuit seeking accountability from the venture capital firms mentioned.

Referencing comments by Gary Gensler, the chair of the United States Securities and Exchange Commission, the lawsuit argues that Lido could be considered a security due to the presence of an alleged group in the middle between tokens and investors, with the public expecting profits based on this intermediary group.

Despite attempts to reach out to Lido DAO representatives, no response has been received at the time of publication. Data from DeFi Llama, a blockchain analytics platform, indicates that Lido holds the largest total value locked among liquid staking derivatives, with over $19 billion in cryptocurrency locked in its contracts. The governance token of Lido reached its all-time high during the last bull market at $6.41 per coin on August 20, 2021, but currently sits at $2.08 per coin.

Tier I

Sector: #18291

Sealed Hiding Place Room

Resource Cache

Resource Cache

Tier I

Requires 25% Tier Progress to Claim
Meme Cache

Meme Cache

Tier I

Requires 50% Tier Progress to Claim
Equipment Cache

Equipment Cache

Tier I

Requires 75% Tier Progress to Claim

After collecting, hiding places will be stored in your inventory and can be opened with Keys.

Other news

EU Seeks Nominations for New Tokenisation Standards Group

European authorities are inviting nominations for a new Tokenisation Standards Group to enhance coordination in the financial system.

user avatarFilippo Romano

Walt Introduces Standalone Android App for Cryptocurrency Trading

Walt has launched a standalone Android app for cryptocurrency trading, allowing users to sign up without a Telegram account.

user avatarEmily Carter

Charles Schwab Expands Crypto Trading Menu with New Altcoins

Charles Schwab has expanded its crypto trading menu to include Solana, Avalanche, and Chainlink, allowing eligible clients to trade a wider range of cryptocurrencies.

user avatarTomas Novak

24X and Standard Chartered Enhance Partnership for Institutional Crypto Trading

24X Bermuda expands its partnership with Standard Chartered to facilitate institutional trading of Bitcoin and Ether, enhancing access to cryptocurrency and foreign exchange.

user avatarKaterina Papadopoulou

Strategy's Dual Approach: Bitcoin Acquisition and Preferred Share Repurchase

On November 9, Strategy announced the acquisition of 1,036 additional Bitcoin alongside the repurchase of approximately 188 million STRC preferred shares.

user avatarMaya Lundqvist

Bitcoin Slips Toward $74,000 After Fed Governor Signals December Rate Hike

Bitcoin's value has dropped significantly, approaching the $74,000 level, as Federal Reserve Governor Christopher Waller voiced clear support for raising interest rates at the upcoming December FOMC meeting.

user avatarLeo van der Veen

Important disclaimer: The information presented on the Dapp.Expert portal is intended solely for informational purposes and does not constitute an investment recommendation or a guide to action in the field of cryptocurrencies. The Dapp.Expert team is not responsible for any potential losses or missed profits associated with the use of materials published on the site. Before making investment decisions in cryptocurrencies, we recommend consulting a qualified financial advisor.