DOrg, a Decentralized Autonomous Organization (DAO) developer founded by Ori Shimony, Asgeir Sognefest, and Jordan Ellis, has announced that it created what it calls the first Limited Liability Company (LLC) aiming to grant its DAO legal status. The news was reported by independent law firm Gravel & Shea on June 11th.
A Decentralized Autonomous Organization is essentially a company with no centralization or hierarchy, and is instead overseen by open source digital rules on a blockchain — a smart contract— and operated publicly by users via a consensus voting mechanism.
According to the report, dOrg claims that its native DAO is now the first legally established entity of its kind in the United States. Currently, the DAO is licensed as as a Blockchain-Based LLC firm in Vermont called dOrg LLC. Meanwhile, the DAO rules and implementation are available on the Ethereum blockchain.
“After deploying its DAO to the Ethereum blockchain, dOrg formed a Blockchain-Based Limited Liability Company (BBLLC) in Vermont, dOrg LLC. By linking the DAO to this BBLLC, the DAO has official legal status, allowing it to enter contractual agreements and offer participants liability protections,” states the report.
Co-founder Ori Shimony has disclosed that the company chose Vermont as its base such as Vermont’s BBLLC law is unique in carving out the option for companies to reference blockchain code – in this case smart contracts – as the legitimate source of authority for the company’s operations.
He further added that the Operating Agreement establishes that the Company will only accept requests to perform services for Clients, allocate work and remuneration to Participants, add new Participants, and distribute voting rights through the DAO’s decision-making engine.
In addition to that, the DAO can now take part in contractual agreements as well as provide liability protection. DOrg reportedly contracted Gravel & Shea to provide a legal wrapper for DAOs.
Shimony made note that the company worked extra diligently to make sure that all legal agreements were very lightweight yet created no backdoors or special privileges that could short-circuit the authority of the DAO.
Respectively, the company intends to share the process so anyone can create legally licensed DAOs. While they are a DAO software developer provider, this new development could lead to making the creation of decentralized organizations easier and safer for users and investors.
“We want to make what we just did accessible to anyone in the world. Ultimately, the process of configuring and deploying a legally registered DAO will be as easy as creating a social media account.”
Meanwhile, the U.S. Securities and Exchange Commission (SEC) ruled back in 2017 that tokens issued by the now-defunct “The DAO” project were to be classified as securities. Despite being a crowdfunded firm, the SEC ruled that The DAO could not be included under its Regulation Crowdfunding exemption since it was not registered as a broker-dealer/funding portal.