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LexDAO July 2023 Recap
Summer is in full swing. And as the weather heats up, so too does the LexDAO machine. In this issue, we cover recent and upcoming events and give updates on what is happening within the DAO.
We are also excited to announce that, for the first time, we will be providing a summary of the biggest stories in cryptolaw this week, courtesy of the LexNews+ Weekly team. Follow below to see what we have in store!
Keeping up with the Bankman-Frieds 💅
Federal prosecutors dropped a campaign finance charge against the now infamous FTX founder Sam Bankman-Fried. The charge alleged Bankman-Fried unlawfully diverted customer funds to certain political campaigns. The charged is being dropped because the Bahamian authorities did not consider it to be included in Bankman-Fried’s extradition, since it was not listed on the warrant.
Though this one charge has been dropped, Bankman-Fried is by no means in the clear as he still faces a host of charges with the potential for significant fines and jailtime. It does, however, mean one less item for him to worry about, and it has caused some in the general public to question if Bankman-Fried will receive a sweetheart deal.
Aside from this charge being dropped, it hasn’t been all good news for Bankman-Fried. Prosecutors are requesting the court revoke his $250 million bail package because the FTX founder has allegedly been using media outlets to harass a key witness and former close friend, Caroline Ellison. Specifically, Bankman-Fried turned over Ellison’s personal correspondence to the New York Times, and prosecutors are concerned this an attempt to tarnish Caroline Ellison’s image among potential jurors. The judge has yet to decide on revoking bail and is requesting written arguments from both parties.
Rook DAO Governance Takeover - Postmortem and Plenty of Legal Questions
Rook to E5
Rook DAO contributor rhizoo.eth has come forward and published a very detailed postmortem of the governance attack experienced by the project this past week. There is a great deal to digest, especially for those interested in DAOs and governance in web3.
The postmortem attributes much of the downfall to a group of activist DAO investors called the “Risk Free Value Raiders” or RFVooors. Much potentially illegal activity by RFVooors is alleged throughout rhizoo.eth’s recount—involvement in the dissolution, misrepresentation and propaganda to influence votes, and external incentives, to name a few.
The recap of events includes a stark warning to all manner of DAOs—there is a motivated group acting in this space, and any DAO may find itself a target sooner rather than later. Vitalik’s statement may best summarize such dilemmas,
“Decentralized governance in some contexts is both necessary and dangerous.”
Through the eyes of the Rook DAO leadership and community, the piece highlights issues of decentralized governance, regulatory uncertainty, and the SEC’s “shotgun approach” to enforcement, as well as putting U.S. crypto teams at risk and pushing innovation to friendlier offshore regulatory jurisdictions. The contributor calls for DAO participants to work together toward the creation of legal precedent for DAO governance.
This is but a short summary, and we encourage interested parties to examine the whole piece, lest you miss out on gems like “DAO judicial innovation is hiring a good lawyer, not developer.”
What’s New in LexDAO
Plenty of exciting events have taken place since our June Recap newsletter, and LexDAO continues to forge ahead in its mission to spread legal resources, tools, and knowledge within the web3 community. Read on to see the hot news we have for you this month as well as future events to look forward to!
LexDAO Admits SuperRare DAO as First Enterprise Member [news]
We initially mentioned a proposal for a new membership type at LexDAO for internet-native organizations back in our January newsletter. LexDAO is now expanding it's membership offerings to better accommodate the growing network of web3-enabled communities and serve relevant legal and technological news, education, and tools to its members and these communities.
We are excited to announce that the new Enterprise Membership is starting with SuperRare DAO! The Enterprise Membership for SuperRare DAO will include:
- 12 AMA sessions in a SuperRare-designated space
- 12 AMA sessions in a LexDAO-designated space
- 5 Individual Memberships
- Recognition on the LexDAO website
LexDAO’s goal with SuperRare’s new Enterprise Membership is to address an industry-wide need by applying copyright and other intellectual property law to SuperRare’s ongoing operations and those of similarly-situated organizations within web3. LexDAO aims to provide SuperRare DAO with guidance as they navigate the opportunities blockchain technologies offer artists, provide peer-to-peer learning mechanisms, solve pressing problems for creators, and develop a space for close collaboration among creators. LexDAO’s LexClinic will assist by providing periodic AMA office hours for SuperRare members and research and document SuperRare's current and proposed copyright & IP mechanisms.
SuperRare DAO is a decentralized organization comprised of $RARE Keepers who have a shared interest in shaping the future of art. Their mission is to revolutionize the economics of human creativity by building a new art market anyone can access. Click here to learn more about SuperRare DAO.
LexDAO members Kyle Smith (#bestape), Paolo Maria Ganga (pmgangi#9608), and Anthony Glukhov (#fortunado_) joined SuperRare Session #22 to kick off conversations between LexDAO and SuperRare DAO and discuss how projects and individuals can protect themselves against scams in the web3 space. This was just the beginning and there will be many more discussions to come covering a wide range of topics.
If your DAO, law firm, or other organization is interested in Enterprise Membership and would like to see how you can work with LexDAO, please contact us on our Discord for more details.
LexDAO’s Development of Critical DAO Documentation and Contractual Frameworks [news]
In coordination with the LexDAO Grants Committee, the DAO is embarking on a project to finally bring the LexDAO membership token back to life. Since its inception, we have had a variety of people work through temporary solutions to the issue of creating a non-fungible membership token that grants access to our systems and platforms. While we are still in the early days of a fully built ecosystem, the first few steps are moving the project in the right direction.
At present, the first important workflow improvement that the leadership team has tackled is to create a wholly owned LexDAO website at lexdao.org that allows prospective members to learn about the DAO while also contributing to the DAO through either membership patronage or work-for-membership. Both of these avenues for membership remain critically important for our infrastructure.
Work for membership has two main value propositions for the organization. First, it allows the group to remain open to anyone regardless of their financial position. Second, it allows prospective members to contribute some of their personal and professional experience to building the DAO from the inside out.
Pay for membership is important for obvious reasons. As a non-profit oriented organization, LexDAO relies on patronage to continue to support its operations and administration. Almost all of our operating budget comes from the membership donations given to the group through paid dues.
As an organization, we have outgrown our legacy systems and setup and have begun taking steps to improve the overall administration, communication, and management of our membership. This is one of the top priorities of the Operating Committee in 2023. While this upgrade has taken more time than we would have liked, it is moving forward with a hybrid of homegrown solutions and technology partnerships which we hope will take the organization into the next phase of its development.
Currently we are working on a contract with a crypto technology provider who has an application ecosystem for managing DAO networks. They have agreed to run a test integration project to have our payment processor trigger the mint of Member 721 NFTs. The project is slated to begin sometime in early August and should run through the end of September. The idea is to get the membership token set up and then work on some more advanced crypto projects with them pending a successful test.
The beauty of using a solution like this is that it provides LexDAO with ultimate flexibility in the future and a modular implementation that can be ramped up, left in place, or deprecated as needed. This is a low-risk use case to pressure test the implementation of an integrated solution, Station’s technology platform, and the partnership with a skilled team of web3 oriented coders.
Once the minimum viable product is created for the 721 Mint Mechanism we will bring the technology summary and the product to the DAO for a vote on its adoption. Please reach out to Cimply for any additional details or to help contribute to the design of this infrastructure.
Endaoment and The Giving Block - State of Crypto Philanthropy Summit Panel with LexDAO [event]
Endaoment and The Giving Block partnered to host the first State of Crypto Philanthropy Digital Summit on June 28. This Summit was a live digital event that brought together blockchain and nonprofit leaders for a day of data-driven presentations and panel discussions designed to provide valuable insights and knowledge to help nonprofits and charities seeking to tap into this blossoming donor base in anticipation of the 2023 Giving Season. The Summit also included conversations around the various technical innovations which can change how philanthropy works, such as programmatic donations involving split payments and royalties. By becoming familiar with these new techniques, and also by appealing to donors’ capital gains tax incentives, nonprofits and other philanthropic enterprises stand to benefit from the emergence of these new technologies and asset classes, as well as from the cultures and communities surrounding them.
The Summit’s keynote speech painted a comprehensive picture of the landscape of nonprofit fundraising in the web3 community. One of the nuances emphasized across this event was that nonprofits do not need to pressure their existing donors to join the web3 economy, but can instead focus on providing exposure to those already using the technology. According to the demographic data highlighted during the Summit, much of the wealth in the crypto economy is young and is relatively inexperienced with nonprofit donations, which presents an opportunity for crypto-friendly nonprofits to define new narratives around donation.
Our friends at Endaoment and The Giving Block have shared a clip from the keynote speech on crypto philanthropy presented by Robbie Seeger of Endaoment and Pat Duffy of The Giving Block, which you can watch on LexDAO’s Discord!
LexDAO at ReFi Summit Panel on DAO Governance [event]
ReFi Summit hosted a panel in Seattle with speakers Kevin Owocki from Supermoduler, Kyle of LexDAO, Deepa of Impact DAOs, and Dan Moyer of Endaoment to discuss DAO governance innovations and bridging traditional governance systems with DAO frameworks. DAO governance is central to developing and growing collaborative ecosystems in web3 and the techniques and theories around DAO governance are constantly evolving as new tools are developed and new frameworks emerge.
Watch a video of the discussion here to get some valuable insights on the most important aspects of and the evolution of governance using web3 technologies.
LexDAO and CougarDAO LLC Educating Cannabis Lawyers [event]
On July 13, LexDAO and CougarDAO members Nick Rishwain, Khurshid Khosa, and James McCall flew to San Francisco to join a panel hosted by the Practicing Law Institute (PLI) educate cannabis lawyers on blockchain technologies and how they may be used to help distribute reparations benefits to those who suffered in the war on drugs.
The panel covered a wide range of topics, including the conflicts between state cannabis laws and the federal Controlled Substances Act, providing a non-technical understanding of what a blockchain technology is and its essential features, developing an understanding of certain blockchain-based technological innovations, and more. Click here to read more about the event.
Q Blockchain — Beyond Code is Law: A Workshop on DAO Constitutions [event]
A few months ago, we spoke about ETHDenver and Q Blockchain’s workshop with Martin Schmidt and LexDAO members Jordan Teague (@jordanteague) and Kyle discussing DAO constitutions, the different decision types that occur according to DAO constitutions, how to create a legal wrapper for a DAO, how that wrapper relates to a DAO’s constitution, and more. Q Blockchain has now uploaded a video of the workshop to their YouTube channel. If you missed the discussion, you can watch the video here to see what you missed or refresh your recollection.
Twitter Space on Legal for DAOs: Kali + Nani with LexDAO [event]
Ross Campbell and Kyle joined Deepa from Impact DAO for a co-hosted Twitter Space with LexDAO on July 26 to talk about Kali, Nani, Wrappr, and LexDAO, how each project interacts, and the unifying theory behind them all—to bring cryptolaw to the application layer to execute group decisions. The conversation covered the Kali and Nani projects, the benefits of legal wrappers for protecting DAO members, and the goals of computational law generally (e.g., making legal information consolidated, accessible, standardized, and machine-readable for use in applications).
The tools released to the public by these projects allow other communities obtain legal status by creating and stamping a multi-sig or DAO with corporate formation information as embodied in an NFT. This leads to better accountability between communities. Web3 projects should familiarize themselves with the various entity forms available that offer limited liability protection for their members to avoid unintentionally being misclassified as partnerships and taking on greater risks. Listen to the Space here to learn more!
ETH Roatan Meetup and Discussion About On-Chain Real World Asset Management [event]
The Real World Asset Consortium (@RWAConsortium) is a project started within LexDAO and created using Kali as an UNA on the Arbitrum network. Their membership includes researchers, open-source innovators, legal engineers, and crypto operators on a mission to advance the frictionless composability and decentralized ownership of real world assets.
ETHMilan on October 5 and 6 [event]
ETHMilan will be taking place in Milan at the Hotel Palazzo Delle Stelline on October 5 and 6. You can visit the official event website to read about the topics to be discussed, see a list of speakers, apply to speak, sponsor, or volunteer at the event, and buy tickets
LexDAO is cooking up some fun to hand out at the event and LexDAO member, Paolo, will be attending. So, if you will be there as well, make sure to find him and pick up some exclusive LexDAO swag.
LexDAO is always looking for new members! If you are interested in the work we are doing:
Check out our Discord and ask some questions (feel free to DM our Assistant Operator Cimply (Cimply#3820) with any onboarding questions).
Join our bi-monthly governance calls on Wednesdays at 12pm EST in Discord!
Special thanks to our contributors: Nick Cross, Kris Jones, @txBlokChainLaw, and Kyler Wandler
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