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

Metaplanet Shows Liquidity Management with Strategic Bitcoin Transactions

Metaplanet sold 10,000 BTC for approximately $790 million and bought back 11,000 BTC for around $950 million, demonstrating its ability to manage liquidity effectively.

user avatarSon Min-ho

Navra Secures $19 Million in Series A Funding to Bridge Traditional Finance and Blockchain

Navra, a startup led by Mike Cagney, has successfully raised $19 million in Series A funding to enhance access to blockchain-based financial markets for traditional investors.

user avatarZainab Kamara

Arbitrum Proposes Strategic Initiative for USDG Stablecoin

Arbitrum has proposed a governance initiative to back USDG as a core strategic stablecoin within its ecosystem, including adding 100 million ARB to enhance liquidity and adoption.

user avatarTando Nkube

BitGo and HashKey Cloud Expand Partnership in Asia-Pacific

BitGo and HashKey Cloud have expanded their partnership to cover multiple areas of institutional crypto infrastructure, including staking, trading, custody, and asset tokenization in Singapore.

user avatarAyman Ben Youssef

Winklevoss Asset Services Submits S1 for Zcash ETF

Winklevoss Asset Services has filed an S1 registration statement with the SEC for the Winklevoss Zcash ETF, aiming to provide direct exposure to ZEC.

user avatarKofi Adjeman

Kraken Pro Launches PreIPO Challenge for Oura and Moonshot Perpetual Futures

Kraken Pro has launched a trading competition for perpetual futures linked to Oura and Moonshot, running from October 6 to November 6, with a $10,000 prize pool based on trading volume.

user avatarNguyen Van Long

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.