Hong Kong lawmaker Johnny Ng suggested the government create a legal framework for regulating decentralized autonomous organizations (DAO). Johnny envisions that it can stabilize the web3 industry in Hong Kong.
According to The Standard , Johnny believes that such a legal framework can help attract major overseas capital and talent. The lawmaker’s statement comes after the recent Hong Kong High Court ruling on the Mantra DAO.
The high court asked six defendants in the Mantra DAO project to reveal the financial details related to the DAO. Johnny stated that this court ruling marks the world’s first judicial examination of a DAO. He also pointed out that all web3 operations come under the rule of law.
“I hope the government can improve the ecology of Web3 and regulate DAOs legally so that more people in the industry will come to Hong Kong to develop their projects and bring in capital and talent,” Johnny said.
Mantra DAO’s court order follows asset misappropriation allegations
The case against Mantra DAO stemmed from an ownership dispute. RioDeFi, who is one of the plaintiffs, claimed that it was the founder of the DAO and that it had hired two out of the six defendants to manage it in 2020.
The court ordered the DAO to reveal its financial spreadsheets and other documents upon the request by the plaintiffs. RioDeFi told the court that the defendants halted reporting to them in 2021. They also cited unexplained withdrawals from a crypto wallet tied to the DAO.
However, the DAO argued that it would be a huge burden to dig out the payment details. They added that the DAO was not a listed company with sufficient manpower.
Defendants claims OM token holders have ultimate power
Amidst the court order, the defendants claimed that its native token “OM” holders had major decision making power related to the DAO. However, the High Court judge, Mr. Justice David Lok, stated that the defendants should have the responsibility to keep a proper account of the crypto trading business operation under the DAO.
Lok also mentioned that the financial disclosure order shouldn’t cause much burden on the defendants, as these details should be provided to even the OM token holders if requested.
