In a historic move that sets a precedent for decentralized autonomous organizations (DAOs), 1inch DAO, the entity behind the 1inch Network, has voted to secure “legal advisory services” from STORM Partners. Notably, this decision comes amid increasing regulatory scrutiny of the crypto and decentralized finance (DeFi) industries.
1inch DAO votes to onboard STORM partners for legal advisory services
After voting on that ended up on January 9, the 1inch community holders, overwhelmingly supported by the 1inch community, decided to bring STORM Partners on board. This marks an important step forward in the DAO’s efforts to navigate the complex legal landscape and protect its members.
With STORM Partners on board, 1inch DAO becomes the first autonomous organization in the broader crypto ecosystem to access expert guidance on compliance, governance and legal defense. From this groundbreaking step, the DAO will receive expert legal advice.
As such, they will strive to operate within the limits of applicable laws and regulations in the United States and abroad.
This move is especially notable given the US Securities and Exchange Commission’s (SEC) recent concerns about the crypto industry and the DeFi sector. Court cases show that individuals who engage in illegal activities, including offering unregistered securities, can be prosecuted individually through a DAO.
To illustrate, following a lawsuit from the SEC, BarnBridge DAO agreed to stop selling what the agency said were “unregistered securities.” As part of the settlement, the DAO and its two founders, Tyler Ward and Troy Murray, agreed to pay $1.7 million in damages.
Lawsuits have devastated DAOs in the past
By seeking legal advice, 1inch DAO proactively addresses these concerns. It also aims to protect community members from the brunt of the law.
The DAO said the decision was a “deliberate attempt to strike a balance between preserving decentralization and addressing operational challenges.” Through STORM Partners, the DAO will have a framework and legal support, charting a path for others to follow.
This decision takes into account the negative consequences of a lawsuit from a government agency such as the SEC. In June 2023, U.S. District Judge William H. Orrick spoke ruled in favor of the US Commodity Futures Trading Commission (CFTC), which agreed to Ooki DAO issuing unregistered commodities.
In a statement, 1inchDAO’s new legal partner, STORM, stated the following, referring to the services and how they will seek to protect the entity:
Our team will focus on, among other things, cross-jurisdictional regulatory compliance, contractual agreements, the DAO governance framework, member liability, legal personality, asset protection, intellectual property, rights enforcement and defense against external claims. Our legal representation, supported by a community-led power of attorney, is intended to ensure the stability, efficiency and longevity of the DAO.
Furthermore, by hiring legal counsel, the community aims to protect the decentralization of the DAO while maintaining “regulatory compliance.” It remains to be seen whether other DAOs will follow suit and vote to elect a legal representative for their communities.
Feature image from Canva, chart from TradingView
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