Michael Kanovitz, a lawyer, has threatened to file a class action lawsuit against Ben.eth, a decentralized autonomous organization (DAO), alleging that its PSYOP scheme bears similarities to cases that have seen enforcement by the Securities and Exchange Commission (SEC). Here are the most important points from this development:
1. The PSYOP scheme: Ben.eth’s PSYOP scheme involves the distribution of tokens to users who participate in certain activities, such as sharing content on social media or completing surveys. The tokens can then be used to vote on proposals within the DAO.
2. SEC enforcement: Kanovitz argues that the PSYOP scheme resembles cases that have seen SEC enforcement, such as the DAO and Telegram cases. In both of those cases, the SEC alleged that the tokens being offered were securities and therefore subject to securities laws.
3. Potential class action lawsuit: Kanovitz has sent a letter to Ben.eth’s legal counsel threatening to file a class action lawsuit if the DAO does not take steps to address the alleged securities violations.
In summary, Michael Kanovitz’s threat of a class action lawsuit against Ben.eth highlights the ongoing regulatory uncertainty surrounding DAOs and their token offerings. While the PSYOP scheme may be innovative and engaging for users, it may also run afoul of securities laws if the tokens being offered are deemed to be securities. As the legal landscape continues to evolve, DAOs will need to carefully consider their token offerings and seek legal advice to avoid potential enforcement actions.