1inch DAO lawyers up to shield members from liability

With a 50,000 USDC payment, the 1inch DAO executes an on-chain vote to hire a lawyer

article-image

1inch and Adobe modified by Blockworks

share

Back in November, Swiss consulting firm Storm Partners pitched its legal and compliance services to the 1inch DAO. The DAO, which governs the 1inch network, is known primarily for its decentralized exchange (DEX) aggregator.

The idea was for the DAO to have legal advice on call to defend its rights and interests, and to start putting in place a structure to protect its members from personal liability.

The proposal moved to an on-chain vote last week. It was overwhelmingly approved and finally executed on Wednesday, with a retainer fee of $50,000 paid in USDC.

There aren’t many — if any — precedents for a DAO voting to hire legal representation. The closest analogue is BarnBridge DAO, which was forced to shut down by the US Securities and Exchange Commission in July.

Read more: ‘SEC investigation’ leads Ethereum DeFi protocol BarnBridge to order halt

The BarnBridge protocol was designed to mitigate risks associated with yield farming and interest rate volatility in the crypto market. Its yield-bearing vaults operated on the principle of “tranching,” which is a method borrowed from traditional finance.

The BarnBridge “Operating Team” had the DAO effectively rubber-stamp a decision already made to engage a law firm to defend its members.

Through a settlement released in late December, the founders of BarnBridge agreed that “BarnBridge DAO offered and sold to the public structured crypto asset securities, known as SMART Yield bonds (“SMART Yield”), in unregistered transactions.”

The DAO was ordered to pay $1.46 million in disgorgement to the US Treasury. Co-founder Tyler Ward described the outcome as getting “nuked.”

With a security-like product and a governance token called BOND, it is perhaps unsurprising that BarnBridge attracted the ire of regulators. 

The SEC order states that the BarnBridge was “purportedly eliminating the need for intermediaries associated with traditional finance, such as banks and broker-dealers.”

But there’s nothing purported about it. The protocol worked as described, and it was an innovative application of blockchain technology. One can well imagine an alternate universe in which some “safe harbor” or sandbox-like approach from regulators would allow the protocol to develop and flourish, before spending time filing paperwork.

The SEC claims that the SMART Yield investment pools themselves were “unregistered investment companies,” and by settling, they were never forced to prove that claim in court.

Swiss-based Storm Partners calls its arrangement with 1inch “much more innovative,” since the firm made its own governance proposal with specific plans in mind.

Read more: 3 DAO governance trends to watch in 2024

“The DAO has chosen us and conferred upon us a Power of Attorney to legally represent the DAO before third parties,” a Storm Partners spokesperson told Blockworks.

The move “represents a bridge between the decentralized ethos of a Web3 DAO and the legal and regulatory stability provided by a centralized legal counsel,” the firm said in a statement following the DAO vote.

Nicola Massella, legal and compliance director at Storm Partners, called the engagement “a significant step forward in the journey towards legal recognition of decentralized organizations.”

Given the hourly fees involved — paid in Swiss Francs — the 1inch DAO can expect somewhere around 200 hours of legal advice for their retainer.

Storm Partners is required to deliver a quarterly report enumerating its activities on behalf of the DAO.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (1).jpg

Research

As AI supercharges surveillance, privacy becomes a prerequisite and the winning stack will combine confidentiality with selective disclosure. Zcash’s Tachyon, composable standards on Ethereum/Solana, and compliance-aware pools aim to make private rails the new norm.

article-image

Swiss regulator Gespa is assessing whether FIFA’s tokenized ticket sales for the 2026 World Cup violate gambling laws

by Blockworks /
article-image

The deal gives Ondo Finance SEC-registered broker-dealer, ATS, and transfer agent licenses to operate regulated tokenized securities markets

by Blockworks /
article-image

Ethereum and Solana funds mark industry first as Grayscale adds staking to spot crypto products

by Blockworks /
article-image

US bitcoin ETFs that seen more than $2.2 billion of net inflows over the last four trading days

by Blockworks /
article-image

More than 75 million U.S. Galaxy owners gain integrated Coinbase One access through Samsung Wallet, with global rollout planned

by Blockworks /
article-image

The central bank signed agreements with firms for fraud, payments, and app services ahead of a potential launch

by Blockworks /