NFTs
PleasrDAO suing Martin Shkreli over intellectual property rights is a sign of ecosystem maturation
The process shows that decentralized organizations increasingly need legal structures to operate in the offchain world.
PleasrDAO may be one of the most crypto-native organizations, but it resorts to a very “trad” tactic: a good, old-fashioned process.
The DAO prosecuted a convicted criminal known as “pharma-bro”, Martin Shkrelion June 11, for violation of intellectual property rights.
The collective, which paid $4.7 million for the rights to the single album Once Upon a Time in Shaolin, recorded by the famous hip-hop group Wu-Tang Clan, alleges that Shkreli made several unauthorized copies of the album and released them to the public.
The action points to the growing trend of decentralized organizations facing the need to create legal structures for their operations.
According to Adam Miller, CEO and co-founder of MIDAO, an organization that helps DAOs and Web3 projects legally incorporate in the Marshall Islands, PleasrDAO’s lawsuit could be a step toward a more mature DAO ecosystem.
“This goes further to make other DAOs realize that they should get a legal entity,” Miller told The Defiant. Miller added that this shows people at Web3 that legal entities are not completely anti-crypto nor are they a bad idea.
Please NFT
PleasrDAO is a collective of DeFi traders, early NFT collectors, and digital artists who have been collecting unique NFTs since 2021. PleasrDAO was first organized to buy an NFT by digital artist Emily Yang, also known as Pplpleasr, hence the name DAO.
The organization, legally represented as an “exempt foundation company,” meaning it is not subject to income taxes, withholding or capital gains, sued Martin Shkreli on June 11.
Single album
Once Upon a Time in Shaolin is a unique album created by famous hip-hop group Wu Tang Clan in an attempt to “save the music industry from crisis”.
Only one individual copy was created and later sold, and it went unheard until Shkreli reportedly played portions of the album during a live stream he hosted on X the weekend of June 8–9, at an event he called “Wu -Tang official listening party.
Shkreli’s move came just days before PleasrDAO had planned your own first public hearing, which took place in a church in New York on June 8th.
Church where the album was played.
Controversy ensues
PleasrDAO went to court to protect its property and some members of the crypto community were quick to criticize the move.
Internet troll with pseudonym 0xMakesy he wrote on X following the “Ditch the ‘DAO’, it’s cleaner” lawsuit, which was retweeted by crypto-native lawyer, Gabriel Shapiro. Several users agreed, Including Hadron Labs general counsel “lawpanda” who wrote “hey, could have called this the Pleasr Foundation, smdh.”
But Miller said legal entities don’t inherently reduce decentralization.
“Decentralization may not even refer to the social structure, but rather the underlying technology,” he said. “If organizations are using a distributed ledger for their tokens, then what doesn’t mean it is decentralized?”
Uniswap Founder Hayden Adams echoed the sentiment.
“People who complain about DAOs’ processes don’t realize that Pleasr is basically a member-owned museum,” he wrote on X, adding that the DAO’s part is “because many of its components and assets live on-chain.”
“It is not a public DAO that anyone can buy, [and] Of course they are protecting the intellectual property rights of the Wu Tang album that they spent $5 million on,” Adams said.
DAO status in all jurisdictions
Miller works directly with the Marshall Islands, which is one of the only jurisdictions that explicitly recognizes the legal structures of DAOs.
And for him, these types of organizations are useful for governments themselves, helping with some much-needed transparency. “Governments get a lot more visibility into how a company operates,” he explained. It’s a trade-off, in Miller’s opinion, that, despite using encryption at its core, authorities will simply have to accept.
Another jurisdiction that recognizes DAOs is the US state of Wyoming. The state recently created a statute called DUNA – the Decentralized and Unincorporated Non-Profit Association – which expands the already friendly legal waters for DAOs in the state.
Experts in laws related to cryptography have given two thumbs up after it passed.
Several other states as well supposedly recognize and have approved specific DAO regulations, including Utah, Vermont, and Tennessee.
Onchain legal clarity
While the previous examples show progress in achieving greater regulatory clarity for DAOs in the traditional world, there are projects working towards finding legal certainty in a decentralized economy.
Kleros, dubbed the “Justice Protocol,” is an open-source online dispute resolution protocol that uses blockchain and crowdsourcing to adjudicate disputes fairly.
PleasrDAO is not the only DAO to take legal action. Token holders of Aragon, a project intended to – perhaps ironically – help create and manage DAOs, have voted to sue the Aragon Association for allegedly offering an unfair rescue plan amid dissolution.
On November 21, the DAO voted allocate 300,000 USDC to Patagon Management, a Delaware-based company owned by Diogenes Casares, to take legal action against Aragon.
The funds allocated to support the lawsuit constitute a “highly conditional grant” that was sent to Patagon Management LLC, a Delaware-based trading company that previously engaged in “similar legal actions” against SpartacusDAO’s alleged founder, Wei Wu, in name of token holders. .
Similar legal action against Wu concerns a $35 million freeze a judge imposed on the leader of SpartacusDAO after SPA token holders were unhappy with the crypto yield project’s progress.
Off-chain impact
Francisco Díaz, researcher at TalentDAO, which also pparticipates in the Decentralized Science space, states that legal resources are especially important in DeSci.
“At DeSci, it is important to have this legal entity so that we can register intellectual property on medical patents, for example,” he highlighted.
“If a DAO has a large influence in the physical world, then it might be useful for them to seek jurisdictional protection,” said Díaz, “If a DAO wants to have an impact outside of the digital world, it needs to have an ‘offchain’ entity that can handle with legal situations like these.”
Music for the people
As for the status of the controversial album, PleasrDAO decided to give people a chance to listen to it even though it was supposed to be released in 2103.
Fractions of the album are now available for purchase on your official website like $1 NFTs in Base. Each purchase speeds up 2,103 in 88 seconds.
To date, more than 95,500 albums have been collected by 4,308 unique collectors.