- The Aragon Association, the non-profit behind the project, has not put its $160 million treasury under DAO control, more than a year after agreeing to do so following a vote.
- DAO members say they are frustrated with the lack of transparency from the Association.
- Now, some investors are threatening the Association with a lawsuit.
Aragon DAO members are threatening the Swiss non-profit behind the project with a lawsuit over a disagreement over its $160 million treasury.
Their frustration lies with the Aragon Association — the organisation behind the Aragon project, which itself is a management service for decentralised autonomous organisations set up to administer crypto projects.
Tensions between investors and the association can be traced back to June 2022 after a vote by Aragon investors to transition control of the project’s $160 million treasury to a voting DAO by November 2022.
However, those funds have not been moved in the 16 months since. The association has also stopped publishing transparency reports that provide information about treasury spending.
Now, Aragon DAO members say they have grown frustrated at the lack of transparency from the Aragon Association and are demanding answers from the group.
“The primary cause [of the frustration] is a feeling of distrust and uncertainty given the numerous months that essentially nothing has been done to deal with the issue of token holder value,” Diogenes Casares, CEO of proprietary trading company Patagon Management, told DL News.
Patagon is a stakeholder in Aragon DAO since the company holds the project’s native ANT tokens.
Patagon is also at the centre of a proposal for the Association to either provide updates to the DAO about the treasury transfer and all other pending issues by November 1, or risk a lawsuit. An Aragon DAO tech guardian cancelled the proposal as it did not meet some of the technical requirements and will have to be recreated on the forum.
DAO members have accused Aragon of spending money from the project to purchase crypto and pay salaries without responding to investor demands.
Critics of the Association say it is acting as thought it’s in an ivory tower, making decisions without informing the DAO.
Aragon promises updates
Aragon’s co-CEO and Association member Joan Arús San Segundo assured the DAO that the Association would provide updates this week.
Arús said the Association will share information this week and thanked the DAO for its patience.
The Aragon Association told DL News that more updates would be provided later this week.
However, several members said that updates have been promised several times in the past, but were never provided.
What happened in May
The situation came to a head in May this year when the Aragon Association pre-empted a supposed DAO raid by so-called activist investors that the Association said were coordinating a rage quit.
Rage quits refer to when a project liquidates part of all of its treasury to redeem the investments made by token holders.
This trend has swept through the DAO landscape, affecting projects where there is a perceived imbalance in the value of the token and the treasury.
Rage quits are often heralded by a stockpiling of native tokens and a general clamour by dissatisfied investors demanding an exit from the project.
The association said it noticed these portents and acted by expelling the so-called activist investors from the project’s social media channels to dampen their reach.
For their part, those investors said they were not yet at the point of coordinating a rage quit.
“Simply lining up some soldiers doesn’t mean an attack,” Jeff Dorman, chief investment officer at Arca, one of the so-called activist investors, told DL News at the time.
“There was absolutely no action here. A proposal hadn’t even been written yet,” Dorman said.
The expulsion of these investors was followed by a unilateral move by the Association to transition the DAO to a grants programme geared toward supporting other DAOs. The association planned to repurpose the DAO and fund the grants with the treasury.
These moves elicited outrage from DAO members, crypto advocates, and other industry observers, many of whom said it went against the ethos of decentralisation. Aragon ultimately walked back these steps and apologised for attempting to repurpose the DAO.
It also agreed to find common ground with disgruntled investors and promised to transfer the treasury to the DAO.
The slow process of this transfer was attributed to the Association “prioritising the technical security of the Aragon DAO to ensure a safe deployment,” according to a statement shared with DL News in May.