The Thing About Corporate Structures is

If you can dream up a scenario, you have an entity that already exists, and already has legal requirements for it.

It's kind of like Rule 34, but for business.

Rather unsurprisingly, it turns out that this applies to the fever dreams of crypto-bros, at least according to federal judge Judge Vince Chhabria.

He noted that the Lido DAO, which claims that it is, "Just software," is actually a general partnership, and as such can be sued or prosecuted for dealing in unregistered securities:

The cryptocurrency industry has long been fueled by a libertarian ethos that sees government oversight and regulatory scrutiny as the enemy of economic freedom. At the same time, it is also an industry that has sought to reproduce goods and services that already exist in the traditional, regulated economy. In theory, the end result of this setup is a marketplace ungoverned by the traditional strictures (or, more accurately, guardrails) of modern economies. In practice, it means that crypto organizations often flout financial laws, only to then claim that the law does not (or should not) apply to them.

This week, the Lido DAO, one of web3’s largest decentralized autonomous organizations, suffered a legal blow in a litigation case that has sought to clarify yet another one of crypto’s many legal gray areas. Lido is currently being sued in a class-action lawsuit that accuses it of having sold unregistered securities. An LLC representing the DAO has leaned heavily into web3’s notion of “decentralization,” in an effort to get Lido and its associates off the hook. Dolphin CL, LLC, which represents Lido, has made the claim that the organization is just “software” and does not represent a “legal entity” and, therefore, cannot be held liable for its action, court documents claim. However, a federal judge shot down that argument this week, maintaining that Lido is, indeed, a “legal entity” and, therefore, must be subject to the same laws and regulations.

Judge Vince Chhabria found that, under California law, Lido represents a “general partnership” and is therefore subject to the same regulations that such arrangements are beholden to. He also found that those organizations deemed Lido’s “institutional investors”—that is, the large companies that fronted much of its money and managed its operations—should be deemed members of that partnership and, therefore, held liable. Those companies include investment firm Paradigm Operations, well-known venture capital firm Andreessen Horowitz, and investment firm Dragonfly Digital Management. A fourth firm, Robot Ventures, was excluded as a partner.

First, a16z seem to be aggressively investing in every cryptocurrency scam on the internet. When will Mark Andreeson be frog marched out of his offices in handcuffs?

Second, Robot Ventures got off because, the plaintiff did not provide sufficient evidence that they made decisions for Lido.

On a more serio0us note, why the f%$# is cryptocurrency legal at all.  

It does not work as currency, with days to process a transaction and fees that make credit companies look like the good guys, and its only real world application appears to be ransoms.