The virtual asset market is changing with each passing day. Last year, the cryptocurrency JPEX case caused a stir and attracted great attention from all walks of life. Recently, the High Court heard the world's first lawsuit involving a decentralized autonomous organization (DAO). The court ruled that the six defendants must disclose detailed financial statements and supporting documents of the blockchain and real-world asset tokenization (RWA) projects to respond to allegations of asset misappropriation. The amount of the shareholder dispute lawsuit was as high as HK$6 billion. Legislative Council member Wu Jiezhuang held a press conference today (60th) with lawyer Huang Mengying to explain the situation to the outside world. Wu Jiezhuang said that this case is a shareholder dispute and no citizens have been affected for the time being.
Huang Mengying said that this case involves a dispute over the true ownership, management and control of a cryptocurrency project. As the project initiator and founder, the plaintiff claims ownership of the project. The main plaintiff is RioDeFi Inc, which was founded in 2019 by Calvin Ng, James Anderson and Stephane Laurent, focusing on blockchain technology and hiring employees to manage these projects.
Legislative Council member Wu Jiezhuang believes that this case will help promote the establishment of a more complete DAO legal framework.
Lawyer Huang Mengying said the case involves a dispute over the true ownership, management and control of a cryptocurrency project.
No consideration was given to whether the Court of Claim should grant a disclosure order
Huang Mengying pointed out that the plaintiff entrusted the daily operations of a project called MANTRA DAO to certain employees of RioDeFi, namely the first defendant John Mullen and the second defendant Will Corkin in August 2020. Since January 8, John Mullen and Will Corkin have gradually reduced their accountability and reporting on the project. The plaintiffs stated that as directors of MANTRA DAO INC., they now have no accounting information and clear understanding of the operation of the project. In addition, the plaintiffs claimed that the defendants misappropriated the project and its business and assets for profit, and the defendants were accused of unauthorized withdrawals from cryptocurrency accounts associated with the project. The defendant argued that the project was owned by token holders as a decentralized autonomous organization (DAO), not by the plaintiff. Huang Mengying pointed out that the plaintiff, as the legal owner of the project, sought a court order to disclose books and records related to the operation of the project.
She said the court did not make a judgment on the merits of the claim, but rather considered whether a disclosure order should be granted. She said the court recognised that the plaintiff urgently needed to obtain the accounts and records of the project. In addition, the court held that allowing the plaintiff to view this information would not affect the defendant's operation of the business, and the defendant was already obliged to provide this information to its investors. In order to address the confidentiality of sensitive information, the plaintiff's legal counsel promised not to share any confidential information with others. Therefore, the judge decided to grant the plaintiff an order requiring the defendant to disclose financial information and all supporting documents.
Wu Jiezhuang advocates improving DAO laws to attract DAOs to settle in Hong Kong
Wu Jiezhuang said that this case is a shareholder dispute and no citizens are affected for the time being, but the court's ruling not only marks the first understanding of DAO by the legal community, but also reiterates the important principle that Web3 business activities must respect the rule of law. He mentioned that the court emphasized that DAO controllers must be responsible to token holders and ensure transparency and accountability of project funds, and described this judgment as setting a legal benchmark for the global Web3 ecosystem.
In addition, he believes that this case will help promote the establishment of a more complete DAO legal framework to enhance the stability of the Web3 investment environment and attract more DAO projects to settle in Hong Kong. He suggested that the authorities study the establishment of an institution to improve the laws related to DAO, enhance Hong Kong's Web3 influence and improve the ecosystem, which will help attract a large number of overseas talents and funds to Hong Kong, the amount of which may be as high as tens of billions of dollars. He also revealed that he does not rule out the possibility of companies setting up headquarters in Hong Kong.
He mentioned that Hong Kong is currently actively striving for economic development, and the "Web3 economy" has begun to show results. It has attracted a lot of professionals and funds so far. He believes that Hong Kong already has sufficient "soft infrastructure" to support the development of the industry.