According to a report by, Decentralized autonomous Organizations (DAO) may consider implementing legal structures after the exploit of Solana’s decentralized finance protocol (DeFi), according to Benjamin BathgateMcMillan LLP, a Canadian law firm.
Bathgate, who has been co-chair of McMillan’s fraud law group for more than 15 years, stated that “a lot of issues are wrapped” around whether DAOs have the right to make legal settlements. He said that this is partly due to the fact that most people don’t have any legal structures.
“In many cases, the DAO just a collection users,” Bathgate told CoinDesk TV’s Friday “First Mover”. “It’s a group of users, possibly with a core contributor doing coding.”
Avraham Eisenberg, a crypto trader, took to the streets in October. Twitter to declare He was part of the Mango Markets group, which exploited cryptocurrency exchanges for more than $100,000,000 by manipulating the value of MNGO, the native token of the exchange.
Eisenberg seemed to have avoided civil liability by returning $67 Million of the stolen funds and negotiating with the Mango Markets DAO. Bathgate said that Eisenberg appeared to have avoided civil liability after he returned $67 million of the stolen funds and reached an agreement with the Mango Markets DAO. He also claimed that the settlement was “ill-advised” and “destined to fail from its inception.” Eisenberg is currently facing wire fraud, commodities fraud, and commodities market manipulation charges.
Bathgate stated that the case against Eisenberg was also unique and unusual to an extent, because Eisenberg’s identity was made public. A supposed bad actor can be found in other ways. Eisenberg said that he was able to identify himself as a bad actor in other cases. “It does raise the question: If doxxed, are you going make these arguments now before the court of law?”
Mango Labs, a Wyoming-based limited liability company The Mango Market DAO governs, and is trying to recover $47 million. They claim that the deal was done under duress. Bathgate said that Mango Labs’ suit is unlikely to succeed. This could be a wake up call for the DAO ecosystem.
Bathgate stated that there will be a “reality check” because settlements of this nature are unlikely to be enforced by the courts. It may also prompt further discussions about DAO structures, such as whether there is a form of LLC. [or] “Limited liability structure” will be used.
Although Bathgate does not believe this lawsuit will succeed, an LLC gives a DAO at least the right to file a claim in court.
“That’s one of the most interesting approaches. Will we see more of this and that legal structure so they can take action on it? [DAOs] Bathgate stated that she would take action on behalf of the company and its representatives.”
Bathgate warned that this may not resolve the problem completely. Questions for DAO community members About settlement law and binding settlements
Bathgate asked, “What constitutes agreement among the users?” Is it enough to click on a vote for a settlement proposal? Does that signify you have agreed to those terms and conditions?”
Brian Klein, Eisenberg’s attorney, didn’t immediately respond to our request for comment.
Continue reading: After the First NY Court Hearing, an alleged mango market exploiter Eisenberg is trying to negotiate bail