Ooki DAO and Lido DAO: What the Courts Have Decided About DAO Liability

If you have ever cast a vote in an unincorporated DAO, you have probably wondered whether that click carries personal risk. In 2026, the honest answer is: it depends on what "voting" means in your case, and federal courts are still drawing that line in real time.

This explainer is general information, not legal advice, and it does not replace your own counsel. MIDAO is the registered agent for entities formed under the Marshall Islands DAO LLC framework, one of the structures discussed below, so that interest is disclosed upfront.

Two federal cases, decided roughly a year and a half apart, define where the law stands right now on DAO participant liability: CFTC v. Ooki DAO and Samuels v. Lido DAO. Together they trace an arc from "a DAO can be sued and shut down" to "some DAO participants may face personal-liability claims, and passive holders may not." Two other rulings, in the bZx DAO and Compound DAO cases, point the same way. Here is how that arc developed, what each case actually decided, and why the next move belongs to a federal appeals court rather than the trial judge.

Adam Miller walks through both cases in this four-minute segment from his Maryland Blockchain Bootcamp talk:

What did the Ooki DAO case actually decide?

In 2022, the Commodity Futures Trading Commission sued Ooki DAO, an organization that, in the eyes of the law, did not exist as anything else: no certificate of formation, no registered agent, no officers, no address. Just software and a global community of token holders who voted on governance proposals. The CFTC's theory was that this collection of people amounted to an unincorporated association, meaning it could be sued and its members could be held liable.

Because there was no front door to serve, the CFTC served the lawsuit through the help-desk chat box on Ooki DAO's own website. No one appeared to defend the organization, so on June 8, 2023, a federal court entered a default judgment: a $643,542 penalty, permanent trading and registration bans, and an order shutting the website down.

The court treated Ooki DAO as an unincorporated association: a "person" that can be sued, served, and bound by a judgment. It did not decide whether individual voters are personally liable for that judgment. But it carries an asterisk worth remembering: because no one showed up to argue the other side, the theory itself was never tested against an adversary. Foundational, yes. Battle-tested, no.

How did Samuels v. Lido DAO change the picture?

The adversarial test arrived in the next case. In late 2023, a Lido DAO token holder who had lost money filed a class action in the U.S. District Court for the Northern District of California, Samuels v. Lido DAO, No. 3:23-cv-06492, before Judge Chhabria. The headline claim was that Lido's governance token was an unregistered security. But the detail that matters for every DAO participant is who else the plaintiff named as a defendant: not just the Lido DAO organization, but several of its most prominent institutional token holders, including Paradigm, Andreessen Horowitz, and Dragonfly. The underlying theory was that Lido DAO functions as a general partnership under California law, and its governance participants are its partners.

On November 18, 2024, Judge Chhabria ruled on the motion to dismiss, and the order cut in two directions at once. First, he denied dismissal of the partnership theory itself: the plaintiff had plausibly alleged that Lido DAO is a general partnership under California law, and the token holders alleged to have actively engaged in governance stayed in the case to face that theory. Second, and just as important for anyone who simply holds a governance token, the same order dismissed one defendant entirely.

Why was Robot Ventures dismissed when the others were not?

Robot Ventures had done one thing: bought and held Lido's governance token. It had not, according to the complaint, voted, proposed, or otherwise participated in governance. Judge Chhabria's order drew a line at the pleading stage: an allegation of merely holding a governance token was not enough to keep an investor in the case. The test the court applied looks at the capacity to meaningfully participate in an organization's management, not the size of a wallet.

That is the sentence every DAO participant should sit with. At the pleading stage, what kept a defendant in the case was alleged behavior, not the token itself. A wallet that holds and never votes looks, in the court's eyes, like a passive investor. Under the plaintiff's theory, a wallet that votes, proposes, or helps steer treasury decisions looks like a general partner, exposed to the organization's full obligations, not just a proportional share. The court found that theory plausible enough to proceed; it has not been tested on the merits.

It is worth naming what that inversion does to incentives. The people any DAO most needs, the ones who show up, draft the hard proposals, and vote on the difficult calls, are precisely the people this reading puts at the most litigation risk, while participants who never engage are the least likely to be named. That gap is exactly what a formal legal entity is built to close: a structure built so that the organization, rather than the individual voter, carries the obligation.

Where does the Lido case stand now?

The part that is easy to miss in summaries of this case: the partnership theory has never been tested on the merits. Denying a motion to dismiss means the judge assumed the plaintiff's allegations were true for the purposes of that motion, not that the judge found them to be true. And before any merits test could be scheduled, the case changed tracks entirely.

In September 2025, Judge Chhabria denied the institutional defendants' motion to compel arbitration. They appealed that denial to the Ninth Circuit within two days, and in October 2025 the district court stayed the entire case while the appeal plays out, with the parties filing status reports every 120 days. Briefing at the Ninth Circuit ran through mid-August 2026, and the appeal now awaits a decision, with oral argument possible. Docket state verified September 28, 2026.

So the question this article opened with sits in a holding pattern with two exits. If the Ninth Circuit sends the case to arbitration, the claims leave federal court, and the partnership theory may never receive a public merits ruling. If the appeal fails, the case can return to district court, where the theory could finally meet evidence instead of allegations: what the named defendants actually did in Lido's governance, and whether it amounts to meaningful participation. Either way, every DAO operating without a legal entity today is operating under a theory that survived its first test and has not been narrowed since.

What did the bZx and Compound cases add?

Two earlier cases reached the same stage as Lido and stopped there. In Sarcuni v. bZx DAO, a federal court in San Diego found in March 2023 that the plaintiffs had "stated facts sufficient to allege that a general partnership existed among the BZRX tokenholders" and let their negligence claims proceed. It was a pleading-stage ruling, not a finding on the merits, and in November 2023 the parties dismissed the case with prejudice, so no merits ruling will follow.

In Houghton v. Leshner, the Compound DAO case, the court in September 2023 let claims against the investor defendants proceed and said Compound DAO's own liability "is more appropriately tested on a full evidentiary record at summary judgment or trial." That case is still pending, with no merits ruling.

Read together, the four cases share a pattern: courts have been willing to let claims against unincorporated DAOs and their active participants go forward, and none has yet ruled on the merits that members are personally liable.

So does casting a DAO vote create liability?

Right now, the honest answer is: it depends on what you do, not on whether you own a token. In Lido, an allegation of passive holding alone was not enough to keep Robot Ventures in the suit. Meaningful participation, voting, proposing, or helping direct a treasury, is the behavior courts are treating as partnership-like conduct inside an organization the law does not otherwise recognize.

None of this is unique to Ooki, Lido, bZx, or Compound. It is the default risk for any group that carries on a common enterprise without forming a legal entity: courts can fill the gap with general partnership law, and general partnership law makes each partner liable for the whole obligation, not a proportional share. A formal legal entity gives an on-chain organization a legal home so that obligations can sit with the entity rather than the individual voter. For the fuller picture of what a lawsuit looks like once it reaches a DAO, see what happens if your DAO gets sued. When the Lido suit was first filed, Adam Miller put the lesson plainly on the Just DAO It podcast: "Lido DAO didn't have an all-encompassing legal entity or any clear legal structure that would make it obvious that the people involved are protected from personal liability associated with Lido's activities."

Frequently Asked Questions

What happened in the Ooki DAO case?

The CFTC sued Ooki DAO in 2022 as an unincorporated association of its token holders and served the suit through the DAO's online help chat. No one defended it, and on June 8, 2023 the court entered a default judgment against the DAO: a $643,542 penalty, permanent trading and registration bans, and an order to take its website down. The court did not decide whether individual voters are personally liable.

Has a court ruled that DAO voters are personally liable?

Not on the merits, not yet. The theory that DAO governance participants can be treated as general partners survived a motion to dismiss in November 2024, which means the judge assumed the allegations were true for that stage only. The case has been stayed since October 2025 while the Ninth Circuit decides an arbitration appeal, so no merits ruling is scheduled, and the theory stands untested either way.

Does simply holding a governance token create liability?

Not based on the rulings so far. In the same Lido order that let the partnership theory proceed against active participants, the court dismissed Robot Ventures because its only alleged connection was passively holding tokens. At the pleading stage, the line the court drew was alleged participation, not ownership.

What can a DAO do while the Lido case is unresolved?

Form a legal entity for the organization itself rather than waiting to see how the courts land. A properly formed structure, such as an RMI DAO LLC, gives the DAO a legal identity that can absorb obligations at the entity level, retain its own counsel, and reduce the personal exposure described above for individual members. The theory is unresolved; the litigation risk it creates for unwrapped DAOs is already real.

MIDAO is the sole registered agent for Marshall Islands DAO LLCs, the entity structure built specifically to give on-chain organizations a legal home. If your DAO is still operating without one, the case law above is the argument for starting now, not after the courts finish. Start your DAO LLC registration with MIDAO.