Lido Holder Lawsuit Against Lido DAO

Estimated read time 2 min read

In a surprising turn of events, a Lido token holder, Andrew Samuels, initiates a class-action lawsuit against Lido DAO. This Lido holder lawsuit happens three years after Lido’s incarnation.

Token’s Security Allegations

Unregistered Security Claims

The lawsuit asserts that the Lido token is an unregistered security, placing the Lido DAO under scrutiny for losses.

DAO’s Liability Challenged

Lido DAO faces allegations of liability for losses stemming from the token’s price decline, adding a layer of complexity.

Governance and Token Dynamics

Lido’s Liquid Staking Protocol

Lido, functioning as a liquid staking protocol, allows users to delegate Ether, earning staking rewards while holding stETH tokens.

Collective Governance Model

Governed collectively by Lido (LDO) holders forming Lido DAO, it introduces decentralized decision-making in the protocol’s dynamics.

Lido Holder Lawsuit Details

Filing Against Key Players

The lawsuit targets Lido DAO and prominent venture capital firms, alleging a skewed distribution with 64% dedicated to founders and early investors.

Influence Imbalance Highlighted

Ordinary investors, like plaintiff Samuels, are depicted as unable to exert meaningful influence on governance issues due to this allocation.

Evolution and Token Sale

DAO’s Evolution Unveiled

Initially a “general partnership,” Lido DAO transitioned, seeking an “exit” opportunity, culminating in a public token sale on centralized exchanges.

Public Listing and Investor Fallout

The tokens’ public listing led to purchases by thousands of investors, including Samuels, resulting in subsequent price decline and investor losses.

SEC Chairman’s Perspective

SEC Chair’s Quote in Play

Quoting SEC Chair Gary Gensler, the document emphasizes Lido as a security, aligning with anticipated profits linked to an intermediary group.

Current Status and Value Locked

Lido’s Prominent Position

Despite legal turmoil, Lido boasts the largest total value locked among liquid staking derivatives, securing over $19 billion in cryptocurrency.

Token’s Fluctuating Fortunes

Once soaring at $6.41 during the last bull market, the Lido governance token presently stands at $2.08, depicting a fluctuating trajectory.

Legal and Financial Landscape

As the legal battle unfolds, it intertwines with Lido’s evolving governance structure, placing the protocol at the intersection of legal scrutiny and financial dynamics.