Allegations of Unregistered Security and Governance Issues
A class-action lawsuit has been filed against Lido, a liquid staking protocol, and its governing body, Lido DAO. The lawsuit alleges that Lido’s LDO token is an unregistered security and that Lido DAO is liable for investors’ losses due to the token’s price decline.
The complaint argues that 64% of LDO tokens are held by early investors and venture capital firms, giving ordinary investors minimal influence over governance decisions. The defendants named in the lawsuit include Paradigm, AH Capital Management, Dragonfly Digital Management, and Robot Ventures.
Legal Standing of LDO Token as a Security
The lawsuit cites the U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler’s view that LDO may constitute a security. The document states that the token has an intermediary group between investors and tokens, and investors expect profits based on the group’s actions.
Lido DAO’s Response
Cointelegraph reached out to Lido DAO representatives but did not receive a response at the time of publication.
Lido’s Market Position
According to blockchain analytics platform DefiLlama, Lido retains the largest total value locked (TVL) among liquid staking derivatives, with over $19 billion in cryptocurrency secured within its contracts.
Historical Token Price Performance
The Lido governance token (LDO) reached an all-time high of $6.41 on August 20, 2021, during the previous bull market. Its current price stands at $2.08.