Former Lido holder files class action lawsuit against Lido DAO for crypto losses
A Lido holder initiated a class action lawsuit against the governing body for liquid staking protocol Lido, according to a complaint filed in a San Francisco United States District Court on Dec. 17. The lawsuit alleges that the Lido token is an unregistered security and that Lido decentralized autonomous organization (Lido DAO) is liable for plaintiffs’ losses from the token’s price decline.
Lido is a liquid staking protocol that allows users to delegate their Ether (ETH) to a network of validators and earn staking rewards, while also holding a derivative token called “stETH” that can be used in other applications. It is governed by holders of Lido (LDO), which collectively form Lido DAO.
The lawsuit was filed by Andrew Samuels, who resides in Solano County, California, the document states. The defendants are Lido DAO, as well as venture capital firms Paradigm, AH Capital Management, Dragonfly Digital Management, and investment management company Robert Ventures. The document alleges that 64% of Lido tokens “are dedicated to the founders and early investors like [these defendants],” and therefore, “ordinary investors like Plaintiffs are unable to exert any meaningful influence on governance issues.”
According to the filing, Lido DAO began as a “general partnership” made up of institutional investors. But later, it decided to have “a potential ‘exit’ opportunity.” To facilitate this opportunity, it decided to sell Lido tokens to the public by convincing centralized exchanges to make them available on their platforms. Once the tokens were listed, plaintiff Andrew Samuels and “thousands of other investors” purchased them. The price then fell, causing losses for these investors, the document alleges. It claims that these firms are liable for the losses as a result.
Related: LidoDAO launches official version of wstETH on Base
Quoting United States Securities and Exchange Commission Chair Gary Gensler, the document claimed that Lido is a security because there allegedly is “a group in the middle [between the tokens and investors] and the public is anticipating profits based on that group.”
Cointelegraph contacted Lido DAO representatives but did not receive a response by the time of publication.
According to data from blockchain analytics platform DeFi Llama, Lido has the largest total value locked of any liquid staking derivative, with more than $19 billion worth of cryptocurrency locked within its contracts. The Lido governance token reached an all-time high during the last bull market, when it sold for $6.41 per coin on August 20, 2021. It currently sits at $2.08 per coin.
Current laws in the United States do not explicitly protect open source software developers and create the risk of retroactive prosecution.
Jeremy Kranz, founder of Sentinel Global, a venture capital firm, said investors should be “discerning” and read the fine print on any stablecoin.
Politics
Labour deputy leadership candidate accuses opponent’s team of ‘throwing mud’ and briefing against her
Lucy Powell has accused Bridget Phillipson’s team of “throwing mud” and briefing against her in the Labour deputy leadership race in a special episode of Sky’s Electoral Dysfunction podcast.
With just days to go until the race is decided, Sky News’ political editor Beth Rigby spoke to the two leadership rivals about allegations of leaks, questions of party unity and their political vision.
Ms Powell told Electoral Dysfunction that through the course of the contest, she had “never leaked or briefed”.
But she said of negative stories about her in the media: “I think some of these things have also come from my opponent’s team as well. And I think they need calling out.
“We are two strong women standing in this contest. We’ve both got different things to bring to the job. I’m not going to get into the business of smearing and briefing against Bridget.
“Having us airing our dirty washing, throwing mud – both in this campaign or indeed after this if I get elected as deputy leader – that is not the game that I’m in.”
Ms Powell was responding to a “Labour source” who told the New Statesman last week: “Lucy was sacked from cabinet because she couldn’t be trusted not to brief or leak.”
Ms Powell said she had spoken directly to Ms Phillipson about allegations of briefings “a little bit”.
Bridget Phillipson (l) and Lucy Powell (r) spoke to Sky News’ Beth Rigby in a special Electoral Dysfunction double-header. Pics: Reuters
Phillipson denies leaks
But asked separately if her team had briefed against Ms Powell, Ms Phillipson told Rigby: “Not to my knowledge.”
And Ms Phillipson said she had not spoken “directly” to her opponent about the claims of negative briefings, despite Ms Powell saying the pair had talked about it.
“I don’t know if there’s been any discussion between the teams,” she added.
On the race itself, the education secretary said it would be “destabilising” if Ms Powell is elected, as she is no longer in the cabinet.
“I think there is a risk that comes of airing too much disagreement in public at a time when we need to focus on taking the fight to our opponents.
“I know Lucy would reject that, but I think that is for me a key choice that members are facing.”
She added: “It’s about the principle of having that rule outside of government that risks being the problem. I think I’ll be able to get more done in government.”
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Insider vs outsider
But Ms Powell, who was recently sacked by Sir Keir Starmer as leader of the Commons, said she could “provide a stronger, more independent voice”.
“The party is withering on the vine at the same time, and people have got big jobs in government to do.
“Politics is moving really, really fast. Government is very, very slow. And I think having a full-time political deputy leader right now is the political injection we need.”
The result of the contest will be announced on Saturday 25 October.
The deputy leader has the potential to be a powerful and influential figure as the link between members and the parliamentary Labour Party, and will have a key role in election campaigns. They can’t be sacked by Sir Keir as they have their own mandate.
The contest was triggered by the resignation of Angela Rayner following a row over her tax affairs. She was also the deputy prime minister but this position was filled by David Lammy in a wider cabinet reshuffle.
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