How does the law treat a DAO?

The Ooki DAO case

On 22 September 2022, the US Commodity Futures Trading Commission (CFTC) settled charges against bZeroX, a company, and its two founders. Its order required them to pay a $250,000 penalty.¹⁰ The order found that they had illegally offered leveraged and margined trading in digital assets.¹⁰

The same day, the CFTC sued Ooki DAO, which had taken over the same trading protocol. The CFTC alleged that the founders told their community that moving the protocol to a DAO would make it "enforcement-proof".¹⁰ Its order against the founders found that the DAO was an unincorporated association, and that they were liable as active members of it.¹⁰ The CFTC's release links to a dissenting statement by one of its commissioners.¹⁰

The court case went like this.^2,3,1

• Who controlled it. The court accepted the CFTC's account that Ooki DAO's token holders controlled the protocol by voting their tokens, for example to update code or pause trading.²
• No defence. Ooki DAO did not appear in court. The judge said this was a "strategic decision", not ignorance of the case.²
• The other side. Four outside parties filed briefs disputing whether, and under which definition, Ooki DAO counted as an unincorporated association. The judge found it met the definition under both state and federal law.²
• The outcome. On 8 June 2023, the court entered a default judgment. It ordered a $643,542 penalty, banned the DAO from trading and registering, and ordered its website shut down.^3,1

A default judgment means the court took the CFTC's well-pleaded allegations as true, because nobody defended the case.² The CFTC called the ruling "precedent-setting", because the court held that Ooki DAO is a "person" under the Commodity Exchange Act and so can be held liable for breaking it.¹

A private lawsuit raised a similar question. In November 2024, a federal judge in California ruled that an investor had adequately alleged that Lido DAO was a general partnership, whose partners can be held liable for its activities.¹¹ This was an early ruling on allegations, not a finding of liability. As of October 2026, that case was paused while an appeal about arbitration was pending. Module 26 covers it in more detail.^11,12

Securities law

In July 2017, the SEC said tokens sold by an organisation called "The DAO" were securities. It warned that US securities laws apply whether the issuer is a company or a decentralised autonomous organisation. It brought no charges in that case.¹³ Module 26 covers the report, and what has changed since, in more detail.¹³

Laws that give DAOs a legal form

Some US states have passed laws that let a DAO become a legal entity.^4,5,6

A few details show how these laws are written for code.^4,7,6

• Wyoming DAO LLC. Its articles must give a public identifier of the smart contracts it uses. Since 2022, the Secretary of State dissolves it if it doesn't provide one within 30 days, and all its smart contracts must be able to be upgraded.^4,7,8
• Wyoming's filing office. Its FAQ, revised in March 2022, gave a $100 filing fee. It said anyone can register a DAO from anywhere, but needs a Wyoming registered agent.¹⁵
• Utah. To qualify, a DAO must run on a permissionless blockchain, publish its code, have that code go through quality assurance, and have at least one member and a legal representative.⁶

Real DAOs use these forms. Uniswap's documentation says the Uniswap Foundation proposed in August 2025 that Uniswap Governance adopt a Wyoming DUNA, now called "DUNI". It says DUNI gives members limited liability protections and that the governance process did not change.^16,17

Summaries of these laws can go out of date. Ethereum.org's DAO page, last updated in June 2026, named Wyoming, Vermont and the Virgin Islands as places with DAO laws "in some form". It did not mention Utah.^18,6 Read the law itself.⁶

Other DAOs use a company outside the US as a legal "wrapper". The Arbitrum Foundation, for example, describes itself as a Cayman Islands foundation company, and says the ArbitrumDAO can elect or remove its directors. Module 26 explains how such foundations work.¹⁹