Hong Kong Lawmaker Proposes DAO Regulation to Attract Global Talent
Date: 2024-08-20 Author: Oliver Abernathy Categories: BLOCKCHAIN
Johnny Ng said Hong Kong should seize the opportunity to regulate blockchain entities following a landmark court ruling that forced the project to disclose financial records worth HK$6 billion.
“I hope the government can improve the Web3 ecosystem and legally regulate DAOs so that more people in the industry can come to Hong Kong to develop their projects and attract capital and talent,” Ng said. He stressed that this could be an important part of economic growth.
Mantra DAO vs. RioDeFi Court Ruling
Ng’s call comes after a recent High Court ruling involving Mantra DAO. The court ordered Mantra and infrastructure partner RioDeFi to disclose financial data on Mantra Chain’s operations. The ruling stems from a dispute with former RioDeFi employees accused of misappropriating funds and business from the project.
RioDeFi, the plaintiff in the case, claims that it played a major role in the project’s creation and hired two of the six defendants to manage the project in 2020.
Ng noted that the project’s market value is HK$6 billion ($780 million).
Misappropriation allegations
Last year, the court ruled that Mantra DAO must provide financial documents to the plaintiffs upon request. The court recently revealed the reasons for that decision.
RioDeFi, which was incorporated in Malaysia in 2019, claims that the defendants stopped reporting to them in 2021. The plaintiffs also accuse the defendants of making unjustified withdrawals from a crypto account associated with the project.
When the plaintiffs requested financial information, the defendants argued that providing payment data would be difficult given the lack of resources typically available to public companies.
The plaintiff accuses the defendants of misappropriating the project’s assets and making unauthorized withdrawals. The defendants, however, said that ownership and control rests with the DAO token holders, not the company itself.
High Court Judge David Lock noted that courts in Hong Kong and elsewhere have limited experience in resolving disputes related to crypto trading.
A Legislator’s View of the Ruling as a Precedent for Web3
Ng sees the ruling as an important legal precedent for the global Web3 community. He also emphasized that the case remains a dispute between shareholders and does not affect the public.
The legislator has repeatedly emphasized the need to make Hong Kong a hub for cryptocurrencies and Web3. He has previously called for major crypto exchanges like Coinbase to obtain licenses in Hong Kong, indicating his intention to create a favorable environment for digital currencies. He also proposed including Bitcoin in the region's official financial reserves.
