Lido DAO votes to appoint a body to respond to pending class action lawsuit

Following a class action lawsuit filed against Lido DAO in the U.S. District Court for the Northern District of California, the Ethereum staking service recently began voting on the appointment of a body to respond to the pending class action lawsuit.

The lawsuit, filed on April 3 of this year, accuses Lido DAO of violating securities laws because the company operates as a “general partnership” that “operates an Ethereum staking business.” Specifically, LDO tokens or related transactions are being unlawfully offered or sold to the public, the plaintiff argued. This legal development has sent shockwaves throughout the industry.

Lido DAO begins voting: Here’s why

On June 27, the US court ruled that the legal process against Lido DAO had been sufficiently served through public postings by the plaintiffs. The staking service provider was given 14 days to respond.

If no response is received within the time limit, the court may enter a default judgment based on the plaintiff’s claims. This potential outcome poses a significant risk to the project.

To mitigate these risks, the community initiated a voting process to designate an entity to respond to the pending class action lawsuit. The voting went live on snapshot.org and was immediately well received across the market.

Specifically, the proposal proposes to authorize Dolphin CL, LLC to file a motion to dismiss the class action lawsuit, but clarifies that Dolphin CL will not act as a general representative or agent of Lido DAO and will only file a motion on its behalf.

Meanwhile, at the time of writing, the chances of the proposal being passed appear to have increased significantly. An incredible 51 million people voted “yes,” representing 100% of the total votes. Not a single vote was against the proposal.

The community has also pointed out that rejection of the proposal could pose further risks to the project as the default judgment, although not certain, could hamper community work.

Meanwhile, LDO, the native token of Lido DAO, has been trading sluggishly, accompanied by legal uncertainty.

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LDO price drop

At the time of writing, the LDO price has fallen by 4.12% over the past day despite the overall bullish trend in the market. The token was trading at $1.55, with its daily lows and highs being $1.55 and $1.63 respectively.

The weekly chart showed a drop of 20.86%, while the monthly chart showed a decline of 30.66%. This sluggish price trend coincides with the lawsuit and triggers pessimistic sentiments.

It is worth noting that cryptocurrencies like XRP and ETH are prime examples of how regulatory uncertainty negatively affects the price. Crypto market enthusiasts are waiting for further developments on this matter.

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