Web3.0 blockchain project going overseas legal white paper

Report produced by Mankiw Law Firm

Creating a DAO company can meet two main legal needs: It helps create a legal wrapper for DAO members designed to limit (protect) DAO members from judicial, tax, financial, and other liabilities for such DAO activities. Otherwise, the DAO may be treated as a general partnership, which will result in unlimited liability for each DAO member's activities.

What happens when a DAO member faces unlimited legal liability in a DAO? This type of liability can arise when a DAO is involved in some kind of lawsuit. For DAOs, it ensures compliance with financial management procedures, for example, AML and KYC procedures to ensure the issuance of grants from the DAO Treasury, etc. 3. Why does a DAO need to register a company as a legal entity?

Because unregistered DAOs may be considered general partnerships by some regulators. In contrast to other commercial organizations such as corporations, the assets of a general partnership are not truly divided from its investors. Investor protection is not available and only weaker physical protection is provided. In a general partnership, each member (each general partner) has unlimited legal responsibility for all activities carried out by the organization.

This unlimited liability can be divided into different types: unlimited judicial liability, unlimited tax liability, and unlimited financial liability. There are two main types of lawsuits: Page 3 Lawsuits initiated by regulators (if there is a non-compliant DAO). Such lawsuits can result in DAO members being fined or even criminally liable. Lawsuits brought by investors (cases involving investment misconduct and infringement of investors' rights).

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