The Liability of DAOs and Their Founders Has Been Put to the Test in Court

A U.S. Court in California has ruled in favor of plaintiffs who alleged that the bZx protocol, and governance token-holding members of its DAO, were negligent and liable for losses resulting from a hack that drained its treasury.

The putative class action against bZx, its founders, software developers Leveragebox LLC and Hashed Labs LLC was first initiated in July 2022.

While the court dismissed some of the claims, such as claims that founders Tom Bean and Kyle Kistner are personally liable for breaching fiduciary duty, the fact that it allowed the negligence claims to proceed has created a landmark ruling in the relatively murky topic of the liability of governance token holders in DAOs.

Source: The Liability of DAOs and Their Founders Has Been Put to the Test in Court