Update Nov. 23, 2023 - 7AM UTC: This article has been updated to add comments from Diogenes Casares.
Update Nov. 30, 2023 - 10:25AM UTC: This article has been updated to add comments from the Aragon Association.
A decentralized autonomous organization (DAO) is taking legal action against its founding team after a decision to dissolve its governing body and distribute most of its assets to tokenholders.
On Nov. 2, the Aragon Association announced that it would be dissolving its governing body. The group said it’s deploying the organization’s treasury so that ANT tokenholders can redeem Ether (ETH) in exchange for their tokens. The update will give back around $155 million in digital assets to its stakeholders.
Citing various reasons, Aragon Association shut down the ANT token and dissolved its governing body without consulting the DAO. This has angered a faction in its community, which expressed strong dissatisfaction with the move.
This is pretty crazy— DCF GOD (@dcfgod) November 21, 2023
The @AragonProject DAO has voted yes sue the Aragon team directly for the unfair redemption offer
Might be the first time ever a dao pays to go legal on its own team? pic.twitter.com/bP27niQx1V
On Nov. 21, the DAO voted to allocate 300,000 USD Coin (USDC) to Patagon Management, a Delaware-based company owned by Diogenes Casares, to take legal action against Aragon. The firm will spearhead the negotiations and lawsuit against the Aragon team.
Through a statement, Casares told Cointelegraph that with the way things are, the Aragon Association will get 70% of the entire treasury, plus another $20 million that have already been set aside. In total, Casares believes that the association will get around $143 million, while investors will only get $50 million. Casares explained:
"This is clearly absurd, especially given the team accelerated their own vesting of Aragon tokens which should have been owned by the DAO, further diluting investors stakes."
Casares believes that what the association is doing is against the law and is looking to proving this through a legal battle. "We believe this will be an example case that such blatantly malicious activity is illegal and we are looking forward to proving this in court," he added.
In a statement sent to Cointelegraph, the Aragon Association refuted the figures laid out by Casares and said that they are "inaccurate" and "speculative."
According to the proposal, this will ensure that “a reasonable amount of dead token funds are returned to those that have redeemed pro-rata and not taken away from these former tokenholders.”
The passed proposal also allows Patagon to maintain confidentiality when it comes to protecting the legal process and to have the ability to decide on a legal strategy. However, all of Patagon’s financial transactions related to the case will be in public reports. Patagon will also store the funds in a wallet address and a bank account separate from the company’s business accounts.