AMA: Legal entity for BanklessDAO

General
1

Authors: Daolexa

Squad: Legal guild

Summary.

Following the discussions around branding and legal entity, Legal guild is organizing an AMA for the community to address a variety of legal questions that arose.

Background.

After the backlash DAOStewards received from crypto Twitter, the founders of BanklessDAO proposed some legal and branding measures.

The proposal aims to:

  • Clearly separate the HQ and DAO as brands.
  • Establish guidance on the brand usage.
  • Define the relationship between the DAO and the HQ.
  • Propose creating a legal entity for the DAO so it can enter into brand agreement with the HQ.

The DAO regulatory framework is not easy to navigate and does not offer simple copy-paste solutions as it may be the case with traditional entities. While some jurisdictions might have worked well for some projects, that necessarily does not mean that is a good solution for others as well.

The Legal guild aims to avoid oversimplifying selection of the jurisdiction of the incorporation by providing the community with information vital to making such decisions.

Intent:

The Legal guild is organizing an AMA to provide the community with basic education on the legal options and potential challenges for the bDAO in regards to the incorporation. The above mentioned forum post brought up Panama and the Caymans as potential jurisdictions, and the Legal guild wants to ensure that the community is aware of other options, potential risks associated, and has necessary information before making any final decisions on the legal entity.

AMA Details:

Where: Community call on Discord

When: The usual Community call time - 4PM UTC

Date: February 9th

Speakers: LawPanda, Tertius, Teresa, TheThriller

Community Feedback:

The AMA to discuss the legal entity will be held during the Community call on Friday, February 9th (leave a bit extra time for attendance).

The Friday AMA will be strictly focused on the incorporation of the DAO and the nuances of having a legal entity.

In the forum post, two questions were brought up - the legal entity and branding. If you would like to have a separate AMA to discuss the branding issue, please let us know and we will organize it.

POLL:

  • Yes, I would like an AMA to discuss branding.
  • No, I don’t think it’s necessary.
0 voters

Next steps:

We would love to hear from you.

While we are preparing for the upcoming AMA, we would love to get your questions and thoughts here so we can discuss them during the AMA and provide you with the best answers possible.

Please use this post to share your thoughts, questions, and what you would like to be addressed in the legal entity AMA.

3 Likes
2

Moved to general since not pertaining to governance.

3 Likes
3

Thanks @Icedcool !

2 Likes
4

This must be the 4th?6th attempt at attempting to square the circle in trying to operate a global NGO-style movement without the G. For context, the mission statement is to reach out to global population currently without access to financial services (xref UN SDG 17) with cartogram

cartogram-World
cartogram-World1200×628 111 KB

So what principles need to be retained irregardless of the legal skeleton? I put forward

  1. Freedom of association - any sovereign individual should be free to pick whom they want to deal with

  2. Fruits of labor (usufruct + Locke theory of time input) … individuals should not be coerced into debt-peonage, deprived of their efforts … but leave open to quibble/negotiate the ownership/operation of resources (which are shifting from real to intangible)

  3. diversity of financial systems - this is not a principle but is a side effect of web3 in that freedom of association (and non-association) + programmable value systems allow for more alternatives to the prevalent fractional credit system. This means hate it or leave it, Sharia finance is equally as valid as trillion dollar coinage. Instead the choice(s) of jurisdiction should be least headache in resolving friction points between such financial sub-systems.

Specific countries provide
a) useful default settings (cf Swss verein vs US UNA)
b) existing resolution mechanisms (eg Delaware commercial courts)
c) precedents to avoid repeating common disputes (cf UK for international maritime law)

but come at cost of
a) onerous reporting requirements and licensing hurdles (fit person yadda yadda)
b) norms which may be inappropriate when applied to diverse countries eg modern slavery laws vs survival/subsistence
c) cultural nuances (see book Debt 5,000 years) eg inheritance vs gifts

So in the interest of financial diversity, perhaps the solution is not a single legal entity but a palette and let individual business units come to unincorporated joint ventures underneath their pick of an administrating entity with segmented accounts (so no cross-debts).

2 Likes
5

Current external perception of bDAO

image
image700×336 59.2 KB

Immediately after the formation of Bankless DAO, Bankless LLC submitted a genesis proposal requesting a one-time grant of 250,000,000 BANK vesting over 3 years (includes a 6-month cliff) for ongoing participation in the Bankless DAO.

The proposal overwhelmingly passed and the new distribution of BANK is as follows: retroactive distribution (30%), Treasury distribution (non-vested) (5%),treasury distribution 3 year vesting period (40%) and Bankless LCC (25%)

This seems to be (the only?) legally enforceable promise but there is a moral question whether the original PR would constitute some form of estoppel. This does create a deadline (mid 2024) for post-vesting (which can be a separate retrospective on the performance of Bankless LLC during this 3 years).

There is also a time-locked BANK token which is to manage the liquidity of the treasury.

I will not address the tokenomics since the legal structure is in support of the operations which will alter in light of the pause

3 Likes
6

I’ve heard some people say that this proposal + exchange of BANK ratified the agreement for the DAO to use the Bankless brand. What are your thoughts on this?

1 Like
7

Define “use” … I’ve noticed that there is some confusion between the content (newsletter/podcasts/media) and the logo (and its subsequent variations). The existing law of trademarks traces its roots back to the tort of passing off, in that a symbol (incl geographical indicators) would represent a source, a quality / standard, and later on associated values / attributes. So bankless (with lowercase b) could mean everything from cutting up your credit cards to avoid the debt treadmill to renouncing citizenship and wanting to live on an offshore fort. But Bankless (R) is a registered symbol that under law is exclusive to Bankless LLC in the category of clothing swag and information services. This gives them legal rights enforceable in a court of competent jurisdiction (which is another problem) to prevent others from

  • duplicating (without permission) giving rise to counterfeits
  • diluting … selling inferior services (even if with permission)
  • defacing - doing something which damages the brand, in this case a subDAO funding application with (depending on your PoV free-riding on the existing rep) with the Bankless blowback of RSA & Dave being accused of being grifters … from their podcast, I can emphasise because this is an affront to their sense of ethics (and in their eyes unjust/misinformed accusation) and this damage to their reputation has economic and social consequences.

So the question is not the implied promise (cf affiliate programs) but the boundaries of what is acceptable usage (for both sides).

Hence the poll indicates universal consensus to come up with what I would call an IP Policy Handbook (assuming a formal legal relationship TBD) … which should cover trademarks, probably content which is derivative works and the threshold for transformative, and the tricky one of confidential info such as customer lists.

Others have suggested bDAO (non-profit) vs BanklessHQ (for-profit) but this is not a binary choice. You can span the spectrum of

  • charitable - eg relief of poverty / financial inclusion
  • non-profit / purpose driven social impact
  • zero-profit (what co-ops are defined as)
  • low-profit (a special category of UK firms labelled community interest corporations)
  • max-profit (the default assumption of most incorporated firms).

some people say that this proposal + exchange of BANK ratified the agreement …

As a legal engineer, I ask … show me what was written down and accepted (what the courts call meeting of the minds not unilateral assumptions). We’re still at the sit down and negotiate stage but an adversarial approach might be there was implied promise of further support which never eventuated (again this is just one PoV and I don’t know the context). This comes back to the point is who owns a story? the teller or the audience (cf fan-fic). Sometimes its good to have clear boundaries otherwise people go off in different directions.

3 Likes