The California court ruled that Lido DAO can be considered a "general partnership established under state law."

On November 19th, a federal court in the Northern District of California ruled that Lido DAO can be considered a general partnership established under state law. The court rejected Lido's claim that it is not a legal entity and classified it as a general partnership, setting a precedent for how profit-driven decentralized autonomous organizations (DAOs) are handled.

The court also ruled that identifiable participants in Lido DAO are involved in managing the operations of the DAO, thus they cannot evade responsibility through its decentralized structure. According to court documents, Paradigm Operations, Andreessen Horowitz and Dragonfly Digital Management were accused of being general partners because they allegedly actively participated in Lido's governance and operations.

Miles Jennings, General Counsel and Decentralization Head at a16z crypto stated in his declaration that the judge’s decision "dealt a huge blow to decentralized governance". He pointed out that according to the ruling, any participation in any DAO (even posting on forums) could potentially be enough to make DAO members liable for other members' actions under general partnership law.