internet business international cryptography
What if a DAO (decentralized autonomous organization) breaks the law?
<p>A <a href="https://en.wikipedia.org/wiki/Decentralized_autonomous_organization" rel="nofollow">DAO</a> 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.</p>

<p>One particular DAO, ominously known as <a href="http://daohub.org" rel="nofollow">The DAO</a>. It's mission statement:</p>

<blockquote>
  <p>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
  <strong>unstoppable code</strong> (emphasis present in original source).</p>
</blockquote>

<p><a href="http://themerkle.com/the-dao-holds-over-38-of-entire-ethereum-supply/" rel="nofollow">It already controls at least $20 million worth of assets</a>, and it hasn't even started doing stuff yet!</p>

<p>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 <a href="http://tvtropes.org/pmwiki/pmwiki.php/Main/ArsonMurderAndJaywalking" rel="nofollow">jay walks</a>?</p>

<ul>
<li>Would its shareholders be punished?</li>
<li>Would its contractors (people it pays in the real world to do its dirty work) be punished?

<ul>
<li>Note that it could still theoretically do things like commit financial fraud (such as ponzi schemes) without requiring contractors.</li>
</ul></li>
<li>Would people involved in the crypto systems allowing it to exist be punished (in the case of The DAO, <a href="https://etherchain.org/statistics/miners" rel="nofollow">ethereum miners</a>).</li>
<li>Would the original programmer be punished?</li>
</ul>

<p><strong>Note:</strong> 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.</p>

<p>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).</p>

<p>The private organizations, in difference to international organizations (the organizations, members thereof are the countries) or the countries are not subjects of international law. They are also not a subject of criminal laws, so they technically can't break the law. The people can.</p>

<p>If the actions of such organizations will break some laws, the people staying behind that organization will be made responsible. Either it will be single individuals, or the whole organization might be declared criminal (such as mafia or a gang) and there everyone, including stakeholders or casual employees/contractors might be subjects to interrogation, arrest and sentence. </p>

<p>As for the problem you describe, when the organization made something illegal under one jurisdiction, and the stakeholders are sitting in other country, where such actions are not illegal, they might only partially be safe. They might be arrested not only in the country where the legal actions are taken, but also in third countries, that have extradition agreements with that country. </p>
