Hong Kong Court Orders Disclosure In Landmark DAO Case

According to Odaily, the Hong Kong High Court has ruled in a groundbreaking case involving a Decentralized Autonomous Organization (DAO), requiring six defendants to disclose detailed financial statements and supporting documents related to a blockchain and Real World Asset (RWA) tokenization project. The case involves allegations of asset misappropriation amounting to over 6 billion HKD. In an interview, Ng Kit Chuang, Chairman of the Legislative Council's Web3 and Virtual Asset Development Forum Committee, expressed concerns about Hong Kong's current framework for Web3 development, suggesting that the Special Administrative Region government should introduce regulations for DAOs. He emphasized the importance of establishing a regulatory framework for DAOs to facilitate the growth of the digital asset ecosystem in Hong Kong. Ng explained that the digital asset ecosystem comprises two key components: exchanges and public blockchains, the latter often operating as DAOs. He noted that DAOs currently lack a legal framework, likening them to "wandering souls" without a place to settle globally. To attract these entities to Hong Kong, he suggested that a regulatory framework specific to DAOs should be established, allowing them to operate legally and even pay taxes. Ng further mentioned that industry feedback indicates a willingness to establish operations in Hong Kong if a compliant framework for DAOs is available. He highlighted challenges faced by DAOs, such as difficulties in banking transactions, and the desire for legal recognition to integrate with traditional finance. He also pointed out that the United States and Abu Dhabi have already implemented legal frameworks to regulate DAOs, urging Hong Kong to follow suit. Given that DAOs lack a legal entity status, Ng proposed that the government could consider a licensing system similar to the current securities industry model. This would involve licensed DAOs clarifying internal relationships and appointing Responsible Officers (RO) to ensure compliance with regulatory requirements and maintain daily operations.