A federal judge in Pasadena, California, earlier this week denied a series of motions attempting to excuse members of the bZx DAO from liability in a novel class action lawsuit filed against the decentralized autonomous organization. The ruling means a court has found that simply owning a token could create legal liability for holders, sending shockwaves throughout the crypto community as traders, investors, and other enthusiasts grapple with the potential implications. While the ruling did not definitively find members of the bZx DAO liable for any wrongdoing (a judgment is still forthcoming), some industry experts framed the move as an unexpected escalation of hostility against DAOs, which aim to leverage blockchain networks to create a decentralized alternative to traditional company structuring. “It means that they feel there is some grounds for the case that a DeFi app with a DAO structure could extend legal liability to anyone who simply holds the token in certain circumstances—and that argument merits more discussion in court,” prominent crypto investor Adam Cochran tweeted of the ruling on Monday.
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