1inch DAO provides risks regarding decentralization in the legal team

1inch's decentralized autonomous organization (DAO) has voted to hire permanent legal counsel from Geneva-based Web3 solutions provider, Storm Partners. The legal team should help 1 inch “address the many challenges that its decentralized nature brings.”

A single poll on getting “universal legal aid” from Hurricane ended on January 9, with a majority of 96.45% approved. Legal services provided by the Swiss firm include regulatory compliance checks, entity structuring, management policy development, contract support, intellectual property protection and defense of foreign claims.

Among the main reasons for obtaining permanent legal counsel, the 1 inch statement cites the court's tendency to apply traditional legal principles regarding corporate liability and regulatory obligations of decentralized entities, as evidenced by recent cases in Europe and the United States.

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The DAO noted that regulatory concerns, liability concerns, contractual disputes and enforcement of rights issues may require legal counsel in the future.

“An organization that wants to shape the financial future and empower individuals to take control of their wealth must face and solve legal challenges.”

However, Storm Partners participates in the development of 1inch's internal rules, governing rules, and policies “based on community decisions.” The DAO will immediately pay the law firm 50,000 USD Coin (USDC) as a retainer fee.

Nicola Masella, director of legal and compliance at Storm Partners, told Cointelegraph that Storm's involvement is intended to complement rather than replace the community's ability to self-regulate.

“The community has full control over the management of 1inch DAO, making key decisions about its operation and future. Our task is to transform these decisions into structured rules and legal frameworks.

That claim is hard to test, although DAOs have hired legal teams for some court cases in the past, and there is no shortage of commercials representing DAOs among law firms. The decision to engage the legal team was primarily a proactive one, Macella explained to Cointelegraph:

“By proactively managing these legal challenges, we aim to protect 1inch DAO and its members from unexpected legal issues. […] In particular, we need to address potential personal liability risks for DAO members.

According to 1inch's statement, the partnership with Storm sets a “historic precedent” for DAOs, as it is the first time a DAO has directly hired a legal team.

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