First official DAO in the US to fight SEC without attorneys

November 21, 2022 Coin Telegraph

American CryptoFed DAO begins litigation battle with SEC over 2021 token registrations, opts not to have attorneys in a fight for registration.

The first official decentralized autonomous organization (DAO) in the United States is taking on the Securities and Exchange Commission (SEC) over its 2021 token registrations.

American CryptoFed DAO has told Cointelegraph it will represent itself without an attorney over SEC allegations that it omitted and misstated information in a securities registration last year.

The DAO registered its native, interdependent stablecoin Ducat and governance token Locke in its 2021 filing with the SEC, but the regulator has begun proceedings to issue a stop order citing a raft of problems with the registration.

In correspondence with Cointelegraph, American CryptoFed chief operation officer and organizer Xiaomeng Zhou confirmed that the DAO will argue its case against the SEC without legal representation:

"We just filed the Notice of Appearance according to the SEC’s rules. This letter means that we told the SEC that we will represent ourselves without attorneys in this case."

American CryptoFed has also indicated that it will file a motion to extend the deadline for its answer to the SEC’s Order Instituting Administrative Proceedings. This will open up a 20-day period in which to build its argument against the SEC’s move to stop American CryptoFed’s registration.

The DAO’s September 2021 filing outlined the details of the inter-dependent stablecoins named Locke and Ducat, which serve as tools for its proposed Wyoming-based monetary system.

As Cointelegraph previously reported, the Ducat is an inflation and deflation-resistant stablecoin that will be used for daily transactions and as a store of value. Locke is the governance token of the DAO, which is intended to stabilize the Ducat and facilitate the administration of its ecosystem.

These tokens are intended to be used by municipalities, merchants, banks, crypto exchanges and other participants in the DAO.

By registering with the SEC, American CryptoFed would become a reporting company and would have to carry out periodic reporting obligations to the regulatory body.

In its whitepaper, CryptoFed noted that its native ecosystem tokens are intended to be used as utility tokens. The DAO looked to preempt any issues with the SEC by registering both Ducat and Locke tokens as securities to ‘ensure compliance with Securities laws and related regulations.’

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Wyoming legally recognizes first DAO in the United States

July 5, 2021 Coin Telegraph

Coin Telegraph

Wyoming is further solidifying its position as the most crypto-friendly state in North America.

The crypto-friendly state of Wyoming has approved the first legally recognized Decentralized Autonomous Organization (DAO) in the United States.

The American CryptoFed DAO received notice from the Wyoming Secretary of State's office on July 1 recognizing it as a legal entity, according to a July 4 announcement.

Marian Orr, CEO of the American CryptoFed DAO, stated:

“Wyoming is the leading digital assets jurisdiction in the USA, and now with this DAO law, Wyoming is arguably the top blockchain jurisdiction in the world. What this means is that creating a true digital currency with mass acceptance is now possible.”

The Merchant Advisory Group (MAG), which represents 165 of the largest merchants in the U.S., expressed its support of the filing. MAG’s chief executive, John Drechny, stated that the group has always advocated for more competition in the payment acceptance space.

The American CryptoFed DAO was established by mobile banking solutions provider mSHIFT on July 1st, 2021. The project describes its mission as promoting a two-token economy that is immune from inflationary or deflationary influences.

Orr emphasized that the DAO’s native algorithmic stable token, the Ducat, facilitates fee-free transactions. The Ducat is based on EOS, which uses delegated-proof-of-stake (DPoS) consensus to achieve high-speed transactions at the expense of decentralization.

New tokens are issued through interest that is paid to Ducat holders and rewards issued to the network’s users. Ducat rewards and interest rates are adjusted dynamically by machine learning, with the Ducat intended to appreciate against the USD by the amount of inflation the dollar experiences.

The DAO also issues its governance token, Locke, which is used to stabilize Ducat.

The governance token is issued in compliance with the Token Safe Harbor Proposal 2.0 outlined by SEC Commissioner Hester Peirce in April.

Wyoming has been at the forefront of pioneering permissive crypto regulations in the United States in recent years, with state regulators working alongside Avanti Bank & Trust’s Caitlin Long to develop a banking charter framework for crypto firms.

In September 2020, Kraken received a Wyoming bank charter, making it the first crypto business allowed to operate as a bank in the United States. Avanti followed suit in October.

In March of this year, Wyoming became the first state in the nation to pass legislation into law recognizing DAOs as a distinct form of limited liability companies.

Locke