Since we can’t comment on announcement posts, this thread is for discussing the recently released Q2/23 Ape Transparency Report.
First order of clarity.
Why are these accounts not audited by a certified body?
We need more clarity on this 2.5M $APE loan that’s sitting on the DOA’s books. Thus far, nobody wants to discuss nor shed light on it.
In the Discord discussion channel related to this, there were more questions than were answers to this pressing issue. To wit, below is an exchange that several of us participated in: @br00no @bigbull @amplify.admin @normie
According to Amplify in that Discord channel:
Most of us would like to know the following related to this loan.
- Who was this loan made out to?
- Who approved/closed it?
- What were the terms of the loan?
- What wallet(s) are associated with it?
- From whom was the $750K received in June 2023?
According to Amplify, the loan was made before this was a DAO. That’s all well and good. But here’s the thing: how is a loan that pre-dates the DAO formation now sitting on the books? How is that even legal (announcer: It’s probably not). Even so, seeing as a payment on the loan was made a few months ago, the pre-existing DAO must know who that loan was made out to and who made that payment.
Why is this info not being shared with the de facto members of the DAO who should be privy to this info? In that regard, what happens if, say, a DAO member, decides to sue the Ape Foundation in order to gain insight into this loan? Better yet, isn’t the Ape Foundation aware of the massive problem that’s going to create? Especially in light of the fact that the DAO is already party to a major lawsuit that’s accusing it - and others - of nefariousdealings that’s all over the news?
- Why is the DAO paying such high legal fees - and to which parties?
This discussion blew up on Twitter (started in Machi’s thread) in which he said:
“We spent 413,222 apecoin on legal fees over the last 3 months. At 4 dollars per $APE that’s 1.6m usd. Lucky we are down at $1.3 so we only spent 550k usd. Make it make sense.”
So I went digging.
In doing so and from a reading of the lawsuit filing (and it’s many supplemental filings), I found out that the ApeCoin DOA isn’t even a named party in this lawsuit. Yuga Labs is the named party.
- Are these legal expenses actually related to the Adonis Real v. Yuga Labs, Inc lawsuit?
- If so, why is the DAO paying legal expenses for a lawsuit that it’s not a named party to?
- If not, what caused the spike in these legal fees and to what parties were they paid?
I can’t speak to the loans, but as far as the lawsuit, former members of the Special Council were named individually in it (edited for misinformation).
Yes - I did see Alexis named in the lawsuit, but that doesn’t lead me to conclude that he was sued as per his work in the Apecoin DAO. To wit: Yat, another highly visible person, wasn’t named in the suit; though he resides in HK wouldn’t matter.
Also, there were 4 people, including Alexis, in the SC at the time this lawsuit was filed. They are Alexis Ohanian, BoredApeG, Vera, Yat Siu.
We still need to understand why the DAO would be paying for named parties in the DAO when in fact they were NOT sued per their roles in the DAO. The lawsuit was solely and purely about the sale of NFTs - an act that the DAO had nothing to do with since it is separate from Yuga.
To that end, so much for that whole “Yuga Labs is separate from the ApeCoin DAO” narrative.
Now there are even more questions than there are answers. And my guess is that it’s going to take either a lawsuit (as in this one where details get unveiled) or an AIP to get them.
I just read more of the lawsuit. I was wrong about ApeCoin not being named.
Also, four of the five original Special Council members, Alexis Ohanian, Amy Wu, Maaria Bajwa, and Dean Steinbeck were named in it as the “Ape DAO Board Defendants” as they were the ones in those positions and lived in the US during the time the lawsuit mentions beginning April 23, 2002. They weren’t elected by the community like the current Special Council.
Excellent research. Good to correct earlier posts or make clear you clarified your facts later. As if a casual reader doesn’t read the whole thread they would build their opinion on misinformed information.
Yes - I saw that too when I read the filings. You are NOT wrong! The ApeCoin DAO is NOT a named party in this suit.
Again, there is some confusion here. Let me explain for the sake of clarity.
The “ApeCoin DAO” is NOT the same as “Ape DAO Board Defendants”. The latter is just a descriptor created by the plaintiff in order to collectively refer to the parties (in this case, those 4 people) as a set. It’s no different from using “Class Acton Party” to refer to 1000 plaintiffs in a class action lawsuit. This is how it’s used in lawsuits for clarity.
See how both “Ivan Soto-Wright” AND his corp, “MoonPay USA LLC” were BOTH sued and referred to collectively as "MoonPay and together with Ivan Soto-Wright, the “MoonPay Defendants”"
If the Ape Coin DAO were in fact sued, it too would have been written similar to the above naming the 4 DAO board members and the DAO (which itself is a legal entity).
So, no - this lawsuit is NOT targeting ApeCoin DAO as that would imply ALL MEMBERS of the DAO - including you (I wasn’t a member at the time of the lawsuit, so it wouldn’t include myself or anyone who joined after the lawsuit was filed). It is targeting 4 [named] members of the Special Council who were in the SC at the time.
To say that naming 4 members of the board is somehow targeting all members of the DAO would be like saying suing the Ford board of directors is the same as suing Ford or the shareholders of Ford. That’s not true. Another example: Suing a Ford shareholder isn’t the same as suing Ford. In this incident case, for example, they sued the owner/ceo of MoonPay and the MoonPay corp itself.
The conclusion is that, for some [unknown] reason, the SC is apparently paying the legal bills for 4 prior [unelected] members of the ApeCoin DAO board even though they - and the DAO - probably had nothing to do with the activities cited in the lawsuit. Normally, such a frivolous filing would be subject to a Motion To Dismiss. Thus far, I don’t see one being filed obo of any of those 4 people. Which I find strange.
At best - unless there is evidence (e.g. in discovery) that the previous iteration of the DAO was somehow involved in the activities that Yuga is being sued for - this is a frivolous lawsuit against those 4 people. Again, nothing an MfD can’t fix. And the latter would only succeed if in fact those 4 people were not involved in those activities being cited.
Regardless, when it’s all said and done, obviously these 4 people, in their roles in the DAO board, had indemnity clauses in their contracts, which is probably how the Apecoin DAO is now picking up the tab for their legal defense. And guess what? If the lawsuit prevails, those settlement costs AND the awarded amounts will also have to be paid from the ApeCoin DAO treasury. Not to mention the legal costs of any appeals.
And this is just one lawsuit with this amount of legal bills - and it’s likely to grow and grow. Imagine what happens when the fight with regulators comes around - or even a copycat lawsuit if this one prevails.
I have to mention that this is a perfect example of why I was clamoring about larger legal funds for the incoming working group bodies. I said this:
"We need to set aside a monthly budget pool that goes towards a “Legal Expense” pool. If not, what happened to every single DAO that’s either dead or dying, is going to happen to us.
So, setting aside a measly $6.5K per month legal fund is incredibly short-sighted. At a minimum, this needs to be $100K per month for $1.2M per year. Then capped for 24 months so, once the fund reaches that amount some months down the road, it no longer increases. This way, the legal pool is sitting there waiting to be spent because the primary target is not going to be the DAO entity itself, the target is going to be the entire Ape Foundation because of how it has setup its structure. Everyone - and do I mean everyone in the org chart - is likely to get a subpoena once the SEC/CFTC get around to their full-blown crack down."
And on July 24, I wrote this too regarding DAO member legal liabilities.
Thinking out loud, I also have to wonder how is the DAO paying these legal fees for the 4 former DAO Special Council, but in the AIP-317 cited above, they’re talking about setting up a separate fund for legal expenses. @amplify.admin since that’s your AIP, can you please shed some light on this?
Not so fast
You are right. But I had also thought that it didn’t mention ApeCoin in the lawsuit, and that was what I was referring to. I wasn’t really clear with my communication.
Someone needs to write an AIP for there to be a “Legal Expense” pool. I believe the legal fees in AIP-317 is to protect the Gov Working group and make sure the Ape Assembly is set up correctly, it does not protect other members of the DAO or upcoming Stewards of the other working groups.
Indeed. I think @ApeForLife is probably the best person suited to write one since he’s an attorney and is best suited to write one that covers all the legal bases. I would write it, but I’m not an attorney and so, I am likely to miss something that needs to be in the AIP.
This also got me thinking…
According to the hierarchy (above) as per AIP-239, the Ape Foundation encompasses leadership roles - which includes the working groups.
So, I am still unclear as to why AIP-317 requires a separate legal budget if AF is already using treasury funds - allocated as-needed - to fund the legal defenses of this on-going lawsuit. @amplify.admin care to shed some light on this please? ty
This image is only a reference to the Working Group structure, not the Foundation.
The Governance Working Group is intentionally separate from the Ape Foundation. There are some things the Foundation simply cannot do, and the Working Group structure is supposed to solve for this by allowing for more operational capacity in the DAO.
Excellent job @SmartAPE !
It’s really strange, especially these last questions, an outrageous amount paid in the process without the DAO even wanting to be a named party in the process.
All of this is really very strange, all these questions raised with complete certainty impact the price of the token.
Thanks for catching that. I just worded it incorrectly (fixed now).
Anyway, my question still stands. Is it then correct that the funding of an on-going lawsuit against past members of the Special Council is because only the Special Council currently have legal protection (indemnity)? And that’s why your AIP-317 has an entry for a legal pool?
I think it’s a question for the Special Council because I don’t think the GwG would have any insight into those details.
very very interesting. Well, this is a new age with new issues to conquer.
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