A DAO is a decentralized organization, typically powered by cryptography. It works much like a business, but without borders. Although a DAO typically receives instructions from its stockholders, it is ultimately controlled by its code.
One particular DAO, ominously known as The DAO. It's mission statement:
The DAO’s Mission: To blaze a new path in business organization for the betterment of its members, existing simultaneously nowhere and everywhere and operating solely with the steadfast iron will of unstoppable code (emphasis present in original source).
It already controls at least $20 million worth of assets, and it hasn't even started doing stuff yet!
My question is, what happens if The DAO or some other decentralized organization breaks the law? For example, what if it breaks contracts, breaks copyright law, doesn't pay taxes, hires assassins or jay walks?
- Would its shareholders be punished?
- Would its contractors (people it pays in the real world to do its dirty work) be punished?
- Note that it could still theoretically do things like commit financial fraud (such as ponzi schemes) without requiring contractors.
- Would people involved in the crypto systems allowing it to exist be punished (in the case of The DAO, ethereum miners).
- Would the original programmer be punished?
Note: I'm not saying The DAO or any other decentralized organizations will break the law. The DAO is even thinking of donating money to charity, which quite a nice thing.
I guess practically a problem that might arise is that these things often operate internationally, and so if the values of the stockholders are based on one jurisdiction, and they don't really care about complying with the laws of other jurisdictions, you would have a problem (especially if they knew that there was nothing that those other jurisdictions could do about it).