Key takeaways:
- A complaint was filed in a San Francisco United States District Court, stating that an LDO holder had started a class-action lawsuit against the Lido controlling body.
- According to the documents, Andrew Samuels, a Solano County, California resident, filed the claim.
A complaint filed in a San Francisco United States District Court on December 17 stated that an LDO holder had started a class-action lawsuit against the Lido controlling body.
According to the lawsuit, Lido’s LDO token is an unregistered security, and plaintiffs’ losses resulting from the token’s price decrease are the responsibility of Lido DAO, the decentralized autonomous organization.
Lido is a protocol for liquid staking that enables users to keep a derivative token called stETH for usage in other applications and receive staking incentives by delegating their Ether to a network of validators. Lido DAO, the group of LDO holders, is in charge of it.
According to the documents, Andrew Samuels, a Solano County, California resident, filed the claim. Lido DAO, along with investment management firm Robert Ventures and venture capital firms Paradigm, AH Capital Management, and Dragonfly Digital Management, are the defendants.
The document claims that regular investors, like Plaintiffs, cannot significantly impact governance matters because 64% of LDO tokens are devoted to the founders and early investors, such as the defendants.
Initially, Lido DAO was an institutional investor-led “general partnership,” per the filing. It ultimately chose to have “a potential ‘exit’ opportunity,” nonetheless.
It decided to sell LDO tokens to the general public by persuading centralized exchanges to allow them to be traded on their platforms to make this change possible.
Plaintiff Samuels bought the tokens along with thousands of other investors after they were listed. The document claims that these investors lost money as the price dropped. It asserts that these businesses are accountable for the resulting losses.
The letter asserted that LDO is a security since there is purportedly a group between the tokens and investors, and the public is expecting rewards based on that group, quoting US Securities and Exchange Commission Chair Gary Gensler.
With more than $19 billion worth of crypto locked within its contracts, Lido has the most significant total value locked of any liquid staking derivative, according to data from blockchain analytics firm DefiLlama. The Lido governance token peaked during the last bull market when it sold for $6.41 per coin on August 20, 2021.
