MakerDAO launches $5M legal defense fund
According to a new social post on Feb. 1, Maker decentralized autonomous organization, or MakerDAO, has approved the creation of a new fund dedicated to expenses related to legal defense.
MakerDAO is the issuer of the DAI United States dollar stablecoin. As told by developers, Maker will allocate 5 million DAI to "reimburse legal defense expenses in case of legal or regulatory action against specific participants of MakerDAO." The post further explained:
In explaining the decision, developers pointed out that such costs couldn't be "transferred through traditional insurance." The MakerDAO Defense Fund will therefore serve as a self-insurance tool for its participants. On the other hand, the pre-existing DAI foundation fund is used to take action against third parties that infringe on Maker's intellectual property.
Maker Governance approved the creation of a new Special Purpose Fund called the Defense Fund. https://t.co/JVrUjhpDrxThe fund will reimburse legal defense expenses incurred by active MakerDAO participants in case of legal or regulatory action.How will it work? ↓ pic.twitter.com/XNPbAafw9v
The organization stated that an external technical committee would manage claims and payouts with authority to recommend the approval or rejection of payouts based on claim submissions. Simultaneously, a controlling committee will review the technical committee's recommendation and have the final say on the claim. Upon approval, funds are paid out in lump sums.
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