Former Lido holder files class action lawsuit against Lido DAO for crypto losses
According to a complaint filed Dec. 17 in U.S. District Court in San Francisco, Lido Holdings' parent body filed a class-action lawsuit against Lido over the liquid stacking protocol. The Lido Decentralized Autonomous Organization (Lido DAO) is responsible for the plaintiffs' losses from the price drop.
Lido is a liquid staking protocol that allows users to contribute Ether (ETH) to a validating network and receive high rewards, and also contains an initial token called stETH that can be used in other applications. It is managed by the owners of Lido (LDO), which together form Lido Dao.
The lawsuit was filed by Andrew Samuels, who lives 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 firm Robert Ventures. The document states that 64% of Lido's tokens are “issued to founders and other early investors.” [these defendants]”And therefore, “ordinary investors such as Plaintiff cannot exercise any meaningful influence over management matters.”
According to the filing, Lido Dao launched a “general partnership” made up of institutional investors. But later he decided to have a chance to “get out”. To facilitate this opportunity, he decided to convince central exchanges to make Lido tokens available on their platforms and sell them to the public. After the tokens were listed, plaintiff Samuel and “thousands of other investors” bought them. The price fell, causing losses to these investors, the document explained. He says that these companies are responsible for the losses caused due to this.
Related: LidoDAO Launches Public Version of wstETH on Base
He quoted Gary Gensler, chairman of the US Securities and Exchange Commission, as saying that the document is a safety net because “there is a group in the middle.” [between the tokens and investors]And the people are expecting 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 Defilama, Lido has the largest total value locked out of any liquid staking output, with more than $19 billion worth of cryptocurrency locked up in contracts. During the last bull market, the Lido Management token reached an all-time high on August 20, 2021, when it traded at $6.41 per coin. It currently sits at 2.08 cents.
