Liability of token holders

Other wrappers in use

Protocol teams also use the Cayman Islands foundation company, the Marshall Islands DAO LLC, the Wyoming DAO LLC and the Liechtenstein foundation. Each has advantages. The Cayman foundation company can have no members and can be controlled by a supervisor who acts on DAO votes. The Marshall Islands DAO LLC recognises on-chain governance by statute. Neither is covered by this book except by comparison. The author's experience is that clients who choose them for a protocol with Swiss or Singapore operations end up needing a Swiss or Singapore entity anyway, for staff, banking and regulatory substance.

The question every governance token holder eventually asks is whether voting exposes her to liability. The answer depends on the wrapper. If the DAO is wrapped in a Swiss association whose articles make token holders members, the holder is a member and is protected by Art. 75a CC. If the DAO is wrapped in a Swiss foundation, the holder is not a member of anything and the foundation's board bears the liability. If the DAO is wrapped in a Singapore CLG, the holder is likewise outside the company unless named as a guarantor. If the DAO is unwrapped, the holder is potentially a partner in a simple partnership or a member of an unincorporated association, with the consequences set out above.

The Ooki DAO judgment established in the United States that voting is participation and that participation makes one a member.¹ Swiss law would reach a similar conclusion through the simple partnership analysis, in which contribution to the common purpose is the test and voting is a contribution. The practical advice to a client who holds governance tokens in an unwrapped protocol is therefore unwelcome: holding is safe, voting is participation, and participation in an unwrapped DAO exposes the voter to the DAO's liabilities. A Swiss family office or Singapore fund that holds governance tokens as an investment should have a policy on voting and should document the legal wrapper of each protocol before casting a vote.

Notes

CFTC v Ooki DAO, No. 3:22-cv-05416 (N.D. Cal.), order of 20 December 2022 holding the DAO suable as an unincorporated association, and default judgment of 8 June 2023. Part J, Chapter VI. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.

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Dr Alexander Ressos, TEP

Of Counsel, KGP Legal LLC

I am Of Counsel with KGP Legal LLC in Singapore, where I work with a global client base of successful entrepreneurs and their families, independent asset managers, commodity trading houses and other commercial clients. I am a German and Swiss attorney-at-law, also admitted as a solicitor in England & Wales and in Hong Kong. I divide my time between Zug in Switzerland, Singapore and Hong Kong. Since 2017 I have advised international clients on more than 700 crypto and digital asset projects. I also have extensive experience in cross-border litigation and arbitration in Singapore, Hong Kong and other markets in South-East Asia and Greater China.

I operate across the key financial centres in South-East Asia, the Middle East and Switzerland, with a particular focus on asset protection, international tax and estate planning, as well as trusts, company administration and other fiduciary services. My philosophy is to serve as a trusted advisor working closely with my clients and to help them achieve their commercial objectives.

All Singapore law advice is provided through KGP Legal LLC, an established and duly licensed firm of Singapore advocates and solicitors.

KGP Legal LLC is a medium-sized law firm in Singapore that is capable of providing the full range of legal services and corporate administration work. Please contact me directly at [email protected] if you need any further information.

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SingaporeIQ is edited by Dr Alexander Ressos, an international business lawyer with more than 15 years of local experience in Singapore as a permanent resident, a Singapore registered foreign lawyer and managing partner of a Singapore foreign law practice. In addition to significant experience in cross-border investments and transactions, UHNWI private client work and sanctions/export controls, Dr Ressos has extensive experience in cross-border business and in crypto and digital-asset projects in Singapore, drawn from more than 700 projects since 2017.

If you are planning a company incorporation, an investment, a holding structure or a market entry through Singapore, you can reach Dr Ressos directly at [email protected]. Singapore law advice is provided by KGP Legal LLC, a licensed firm of Singapore advocates and solicitors. Dr Ressos and his team facilitate the full range of Singapore legal, compliance and company administration services, including company incorporation, corporate transactions, commercial contracts, crypto and digital assets, financial regulatory work and dispute resolution, including litigation in the Singapore courts. For legal, tax and fiduciary services in Switzerland, see helveticaregister.com.