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Aragon DAO votes to sue its founders over dissolution

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  • November 22, 2023

Aragon DAO votes to sue its founders after they unilaterally decided to dissolve its governing body and reallocate assets.

The members of Aragon DAO, a platform that allows developers to create and scale DAOs without coding, have decided to initiate legal proceedings against its founders. This action comes in response to the founders’ decision to disband the organization’s governing structure and reallocate the majority of its assets to its tokenholders, a move that was made without the consensus of the DAO community.

The controversy began on Nov. 2 when the Aragon team announced the dissolution of the Aragon Association, intending to distribute the organization’s funds to ANT tokenholders by allowing them to exchange their tokens for Ethereum. This plan involved redistributing approximately $155 million in digital assets.

The DAO community expressed significant dissatisfaction with the Aragon team’s unilateral decision to terminate the ANT token and dissolve the governing body, citing a lack of consultation and consideration for the broader community’s opinions.

In a decisive move on Nov. 21, the DAO voted to allocate $300,000 in USD Coin to Patagon Management, a Delaware-based firm. This funding is earmarked for legal actions against the Aragon founders. Patagon Management’s role will be to lead the negotiations and manage the lawsuit on behalf of the DAO.

Aragon DAO votes to sue its founders over dissolution - 1

The core of the proposal is to ensure a fair distribution of the remaining funds from the defunct token. The aim is to guarantee that those who have already redeemed their tokens receive a just proportion of the remaining assets, rather than allowing these funds to be unfairly distributed or withheld from former tokenholders.

This case could set a precedent for how internal disputes within DAOs are resolved, especially in scenarios where the decisions of a few impact the broader community. 

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