“The Constitution DAO token is being turned into the latest meme, this living, breathing thing onto itself,” says Yossi Hosson, cofounder and CEO of Metaversal. (As it stands, the Constitution DAO tokens are collectively worth about a half billion.) But Constitution DAO’s inability to escape the same conjectural fate is an uncomfortable comment about the difficulty in navigating cryptocurrency, which remains a financial frontier land. Constitution DAO certainly sought the same and, nobly, tried to avoid another defining characteristic of the space, the purely speculative frenzy that have turned things like Dogecoin into assets with hundreds of millions of dollars in market value. “Then again, it did get a lot of media attention.”Ĭryptocurrency at its core seeks to stick it to conventional authority.
“I don’t know where this would be on any regulator’s radar screen or list of prioritites,” says Palley, who partly specializes in advising fintech and crypto companies. Maybe the SEC, maybe the IRS, which looks over non-profits. What about government action? It is not even clear which regulatory agency this would fall to. It did offer fractional ownership of what amounted to an crowdsourced investment fund.)Īny unhappy donors who wanted to sue Constitutional DAO would likely need “creative lawyering,” says Stephen Palley, a Washington, D.C. By contrast, the DAO investigated by the SEC made no such claims. (More complicatedly, they have also insisted the purchased tokens represented merely an ability to govern the group, not fractional ownership. But it’s unclear whether Constitution DAO’s leaders sold securities, and they certainly would argue they did not, since the DAO as a non-profit entity rather than one designed to increase in value.
In 2017, the SEC investigated an earlier DAO and decided it did have jurisdiction over it, concluding the group had offered what amounted to securities. This was undoubtedly the situation for many: The average contribution was $206.26, the group said.ĭAOs represent the newest thing to emerge out of cryptoland, a place already famously beset by murky legal obligations. Due to the fees involved with converting cryptocurrency to dollars and vice versa, the DAO’s sponsors who contributed a small amount likely walked away with zilch, their capital eaten up in those fees.
Within a few days, they changed their minds, returning to the original plan if they walked away empty handed from the sale: refund everyone’s money. At first, the DAO’s leaders considered keeping the group together and going after some other item. Fueling their push was an enjoyable enough historical parallel, a group of ordinary people coming together to upend a traditionalist institution.īut the collective didn’t prevail at auction-the document instead went to billionaire Ken Griffin-leaving Constitution DAO wondering what to do next. 18, then turn it over to a formal non-profit run by the DAO’s donors. Constitution at a Sotheby’s auction on Nov. The group’s leaders intended to use the money to buy a rare copy of the U.S.
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