Legal Representation for the Terra Classic DAO

Governance & Proposals
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Introduction

Given the ever-changing regulatory environment, especially given the proximity of Luna Classic to recent enforcement actions, we suggest that it is now important that the Luna Classic DAO retain legal counsel to advise some of the core contributors and the wider community about best practices and basic corporate structuring to ensure that we can operate efficiently while maintaining our decentralized structure.

Background

Since the depeg event in May 2022, several individuals in the community have self-organized and proposed various ways to move Luna Classic forward. Internal structures and teams have been set up, but with the recent developments in the regulatory environment, it has become increasingly important for Luna Classic to align its internal structures and proposed ideas to the external world. Voting for this proposal indicates that the community recognizes the need to limit potential legal risks and structure ourselves with a view toward long-term sustainability. This will also enable the community and protocol to execute on some of the proposed ideas for revitalization.

Over the past several months, we have had initial consultations with six US-based law firms, and follow up consultations with three of them to assess their knowledge, engagement, advice, and overall fit for the Luna Classic community revitalization effort. It is now our recommendation that we utilize the services of Horizons Law & Consulting Group (https://www.horizonslaw.io/).

About Horizons Law

Horizons Law & Consulting Group is a leading crypto-native law firm that specializes in providing legal assistance to companies, project core teams, and DAOs in the cryptocurrency industry. They have been in the space since 2016 and have extensive knowledge of the cryptocurrency landscape. Horizons has a proven track record of providing legal counsel to many leading projects in the space. Horizons’ founding partner, Ryón Nixon, served as Solana’s first General Counsel, and his firm has since grown to have worked with other top-tier projects such as Osmosis, Synthetix, Axelar, Tokemak, and Stargaze, among others. Horizons will provide legal representation for the Luna Classic DAO, including advice for individual contractors on the chain who may require legal assistance. Horizons will also advise the community and core team about strategies to mitigate regulatory risk that Luna Classic may face in light of the SEC’s recent enforcement action against Terraform Labs and from other relevant U.S. regulatory bodies.

Community Pool Spend

At this time, we are requesting an initial community spend of $20,000 as a retainer for Horizons Law. Their immediate recommendation is to establish an offshore foundation company that is associated with the Luna Classic DAO. (The approximate costs for the offshore is $100,000 to hire a law firm and service providers in the Cayman Islands for offshore structuring work - this would require a second governance community spend vote) The initial fees will go towards the following actions:

$20,000 - Horizons Law & Consulting Group Retainer

  1. Advise the community on steps toward setting up a Cayman Islands foundation company to associate with the Luna Classic DAO. ( Cayman Foundation Companies are ownerless structures which combine the flexibility of a corporation or LLC with the fiduciary/ownerless benefits of a traditional non-profit foundation.)

  2. Produce advice to mitigate U.S. regulatory risk

  3. Field questions from the Luna Classic community.

  4. Committee will be formed to interface with the law firm

  5. Curated lists of questions from the community will be solicited and presented to the attorneys

  6. Provide guidelines for contractors working from community pool spends

FAQ

Q. Who is represented by the law firm?

A. The goal of this proposal is to have the law firm represent the Luna Classic DAO. Specifically, this means that there would need to be a foundation created that is associated with the protocol. In the initial phase, the law firm would work with core contributors on Luna Classic in order to guide the process towards this goal. This foundation would be associated with the DAO, and ownerless. It would follow governance decisions made by the blockchain protocol. A community committee would be setup to interface with the law firm during the initial months, and would define the protocol and procedure on committee membership guidelines, length of terms, indemnification, and how to best utilize the firm resources.

Q. Is every community member who owns LUNC represented by the firm?

  1. No, but community members would benefit in several ways. There will be specific guidelines created around indemnification by a committee. Initial discussions around this offered ways where community questions can be submitted to the firm for legal advice. For specific geographical questions, the law firm can give opinions (not qualified legal advice) for various international laws. Also initial discussions revolved around ways that any community member could submit applications for legal defense if so needed and deemed appropriate.

Q. Are core contributors automatically represented?

  1. No. Again guidelines will be drawn up in the first few months by a committee on how to best approach this. If it is decided that an individual or group of individuals would be legally represented, and should there be some sort of conflict between the individual and the LUNC Classic DAO, the law firm would represent the DAO. The conflicted individual or group would then have to seek external representation.

Q. Could a team working to benefit Terra Classic be represented by the law firm?

  1. Yes there will be published, transparent ways that any community member or team could become represented. Chain governance always has the final say. Again, given any conflict of interest, the law firm would represent the Luna Classic DAO.

Q. What exactly is happening in the first few months?

  1. The firm has recommended that DAO and contributors start from a “clean slate”. The initial month or two would involve the restructuring or disbanding of current organizations. Guidelines around recent regulatory actions will be disseminated and published for clarity. Research on next steps forward that mitigate risks will also be explored.

Q. What does the offshore foundation offer to the Lunc Classic DAO?

  1. See below.

Future Engagement

After the retainer has been utilized, a public document will be drafted outlining all of the activities that have been accomplished at that time, and delineate more concrete descriptions of next steps to help progress development of the blockchain. At that time, additional spend propositions or alternative arrangements will be discussed on whether or not the engagement should be continued, and under what terms. Initial discussions have strongly suggested that the following steps be considered.

(Approximate costs $100,000) - Offshore Law Firm & Service Providers
Please note this is a rough sketch of future plans, and not final in any way.

  1. Obtain legal advice on offshore corporate structuring

  2. A specific law firm has yet to be identified and will be put to a community vote (The above cost is not for Horizon Law, but for the offshore setup)

  3. Establish a Cayman Islands foundation company

  4. U.S.-based Terra Grants Foundation will be dissolved as an entity and replaced by the offshore foundation company

  5. This will allow the community/protocol to be represented by an entity that can enter into agreements with external entities and a legally-recognized vehicle to provide grant funding through a legally recognized corporate entity

  6. This will establish a tax-optimized vehicle for the protocol treasury

  7. Appoint independent director to service the foundation company

  8. The independent director is required for a Cayman Islands foundation company. He or she owes fiduciary duties to the DAO—not a board of directors or the core team

  9. The director would sign off on development grants and ensure that protocol assets are distributed properly

Should it become necessary, any Luna Classic community member can write a governance proposal to terminate the engagement for reasonable cause and upon the showing of good faith evidence. Upon termination, Luna Classic will be able to clawback any unspent tokens in the compensation package. This provision ensures that the engagement with Horizons is subject to appropriate oversight and can be terminated if necessary.

At the time of this proposal, the approximate spend request for the $20,000 retainer would be 164M LUNC.

29 Likes
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With operation Chokepoint 2.0 in full force this is probably the most important spend proposal that needs to pass as soon as possible IMO.

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Would this be beneficial in the acquisition of the off chain community wallet assets Terra: Community Pool | Address 0x9538d438d506fc426db37fb83dac2a0752a02757 | Etherscan
(roughly worth 3million dollars as of current 3/24/2023)

And what about future plans to use said funding for community projects, payment to developers, intermediaries to developer funding requests/budget management, community airdrops, repegging, etc.

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I really appreciate the proposal, but, before we discuss the proposal, can we discuss you for once?

  1. You just wrote a Medium article saying that you are aligning yourself with objectives which are different from Luna Classic’s. This is 3-4 days back. I can see this proposal here today. I don’t know exactly what to think. A little clarification on your position in the community currently would be really helpful. Cause to come up with this proposal would have taken more than 3-4 days. So were you writing this during the time you were also writing that article? This doesn’t make sense to me at all apart from the fact that this is written by someone else and you are propagating it. That should not happen, and the person who will remain in charge of TGF after you, should be the one who should be proposing this legal plan.

  2. I hope you know that this forum, where you are posting this proposal, is operated by TFL. All assets currently belong to TFL. The logo of Terra Luna Classic also officially belongs to them. You would be naive if you think that they will just give away all of this because some community members said so. It doesn’t work like that legally without an actual transfer of assets. And we are talking about 800 million dollars of assets. I wish to see a letter from this law firm stating clearly that they have already talked to TFL and they will be able to undertake this monumental task. Before that, I wish to see a letter from them stating where they “think” where all the LUNC is - they simply need to account for every single LUNC and write it on a piece of paper and give it to us. If they manage to do this, then they will be able to get the assets transferred to the Foundation Company you are talking about

  3. You have not mentioned who are the directors of this Foundation Company in the Cayman Islands. You have also not mentioned who is representing this company? Are you representing this company? And you will be able to take up this responsibility along with all other responsibilities you currently have? Is this person going to work full-time for the company/community? What are the educational qualifications of this person and which country do they reside in currently?

  4. It seems to me that this is a proposal that TGF came up with. TGF was commissioned by the Terra Luna Classic community to fund projects which are native to the chain. That would include L1 development as well. It would be helpful if you could provide the community with the list of projects that TGF has funded till now and an account of where the money has been used for till now. This will help us judge whether this proposal should be went ahead with TGF or not. Currently, I have serious doubts on the functioning of TGF. I do not think it should be diluted. Instead, I think it should be reviewed

  5. This proposal obviously is a move towards centralisation rather than decentralisation. I personally joined the Terra Luna Classic community and began working on it, and submitted two proposals for discussion here, because the decentralised character of the chain resonates with my idea of a blockchain. I could very well as move to Ethereum or Solana and develop on it. But I am here because this is decentralised. The plan that I have submitted appoints a community sentinel. I have mentioned in that proposal that Terra Luna Classic needs to be registered as an entity at some point of time. I didn’t write - do it NOW. I do not think this is the most important thing to do currently in the journey of Terra Luna Classic since there are probably a million things to do before we get to that point. I believe this proposal is early, and if the plan is to transfer assets from TFL to the community, then that isn’t mentioned in this proposal at least

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I hope lunc come to 10 top global cryptocurrency again

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NO WITH VETO

LUNC is a decentralized global chain that doesn’t fall within the purview of the US justice system, nor does the latter have any way to enforce scrutiny over it. I know Americans think the Sun revolves around their country, but it really doesn’t - the SEC could come down hard on LUNC tomorrow with all their might, and they’d still have no way of shutting it down or limiting its functionality. :man_facepalming:

What this proposal is really about is covering the asses of a handful of LUNC affiliates located in the USA. The community should not be paying money we don’t have just so certain people based in America who supposedly “work on LUNC” can have legal coverage! What the hell happened to trustless decentralized systems?! We as a community are irredeemably pathetic if we have to pay legal fees to protect a bunch of doxxed individuals whose overall usefulness to the LUNC chain is questionable at best! :face_with_raised_eyebrow:

I’m disappointed this is even being proposed at a time when our L1 team is falling apart and a good portion of it is either leaving to start work on a side-chain, or is otherwise trying to piggyback off LUNC funds and community to develop a parallel project that no one asked for in the first place!

To hell with this crap. :-1: :-1: :-1:

NO WITH VETO

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Come on, make up your mind Ed. A few days ago, you said that you were leaving LUNC to focus on your school project on artificial intelligence. And now you want to bleed us for more money for your legal experiments? I’m not going to pay a single lunc to protect a bad actor like Tobias Andersen.

NO WITH VETO

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Why do people want all the glory but no responsibility. I feel like l1 jtf is purposely killing the chain so they can get paid more sats zaradar to his own admission has been Shorting the chain

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It’s time to do this,Big Yes of course.

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It is necessary but for a fraction of the cost.

What are you doing bro? This is rather surprising. I thought you left us behind to go off on your own side chain AI project and are no longer playing with this meme coin. So what is all of this about? How is L1 doing kicking its goals?

And our fake Rabbi of course, stealer of funds, trasher of anyone who contributes… useless as ever.
The US is not a country dear Rabbi its an empire. You should familiarise yourself with the difference.
it is funny to see you cry foul after all the nonsense you have come up with to steal from us.

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Does mean that the foundation or director has veto rights over certain community proposals?
Presumably yes (in order to keep the project safe from legal issues), but are there limits on what they can say no to?

Just in case anyone is wondering, I think legal counsel is an absolutely necessary action.

2 Likes
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Here’s my thoughts on this so far:

I saw on their website all their images are anonymous, even the founder. I had to look up the name online and was able to see his photo. Do they have an office in the USA? Where are they based? Are those all their real names? An anonymous law firm based off-shore is not the most confidence inspiring. I know anonymity in crypto is a thing, but when dealing with legal professionals…

So that’s 120k total for initial consultation and following their advice to set up the DAO. But we need a new law firm to set up the DAO itself… We have 241k in the community pool, bringing that to 121k, which is not even enough for the L1 Team for Q2. But the community rejects raising the tax for more funding and rejected my 75/25% split prop…hmm :man_shrugging:

TGF is a registered non-profit in the USA, which is good for handling community funds faithfully, they are accountable with non-anonymous people. What will the DAO be and will it be considered the same?

So the law firm does not represent the community but the DAO, and takes instructions from the committee of the DAO, not the community itself. At this point this committee sounds like the senate idea which was floated before?

I will consider it further.

3 Likes
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I just don’t think this proposal is needed at this time (if at all). I’ll be voting this down, a big no from me unless someone can convince me otherwise.
There should be more thought going into how to get the price up for investors and not lawyers. I think our priorities are wrong. I cannot see what value having a team of lawyers on a retainer brings to the community.

6 Likes
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So the DAO will be run by a director and a committee, and be able to enter into contracts etc. They are represented by the law firm but the community is not.

This sounds like centralisation to me. This sounds like the senate idea again.

What if the committee and director decide to enter into agreements without the communities approval? Or act contrary to the community? Now LUNC is represented by one director and the people on the committee, instead of the community.

If the community does not approve of the director or the community, if they pass a governance vote, is the Terra Classic DAO subject to community governance?

4 Likes
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Out of curiosity, why can’t be used those $4 mil sitting on a multisign wallet for those kind of actions including developers salaries?
I might be wrong, but as far as I know terra classic community recovered 4 mil usd and money are not used.

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Hey Ed kim we Don’t wants spand Money for this this is not important… So many Dao coin now in market i Didn’t see anyone pay for this law enforcement.even u can look bitcoin they Didn’t care . And usa law enforcement has no value…very soon usd going to collapse… So keep lunc decentralize like bitcoin… In this proposal I’m giving vote no with veto… Please focus on Lunc burn & utility… Don’t spen money for the useless thing Thank u

6 Likes
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I find it funny you lash out at Rabbi, he has always made sense when presenting his views, you just don’t agree with him.

also telling him he is stealing from “us”, what exactly did Rabbi steal? you should look up and in front of you, we have been stolen from already and I can tell you it wasn’t Rabbi, if anyone is crying foul it is you.

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His posting is strange.

First of all, his proposal is different in form from the past.

And the probability of the proposal is also contrary to his recent medium.

He said he was leaving TGF at the last medium but he talks about TGF’s future in this post.

And, there is no reason to need a legal representative for LUNC. The founder, TFL CEO, was arrested yesterday. I don’t understand who you’re protecting when someone in need of legal representation is in custody.

You can expect him to have his account hacked, or another partner who shared his account in Agora wrote this down.

His Agora account was created in May 22 and is a little different from his Medium, Twitter account. It might expect to share his Agora account with others.

That’s how I hope the case comes to an end. Because this proposal is the kind of proposal that destroys the trust in him.

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Just one question. Does this solve our problem of USTC REPEGGING ? After hiring a law firm and creating new company/Dao offshore we will be able to initiate USTC repeg plans ? Because that is the only hope for the chain. Kindly clear this Question and pls add this in proposal so that everyone can see where this proposal will be helpful in this case.

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This all seems like a rework of what Zaradar wanted in the early TR days. He didnt even want to join AMAs and refuse donations because ‘l need legal structure’.

At a time the legal advisor to TR (with Zaradar and Ed included), DAOLexa, left as she felt leadership in TR planned to “set up an LTD company to effectively control and benefit from LUNC assets and, as directors, have power over LUNC holders”

Sounds awfully familiar doesnt it? The same key figures are on the L1TF now too.

LUNC has moved forward without a need for a law firm and Im not going to support spending more on this. Especially at a time when members of a team who are getting paid to develop LUNC are

  • developing side chains having nothing to do with LUNC while being paid by LUNC Community
  • Actively Spread FUD against LUNC on Twitter
  • Voicing and pushing their private ideas of the direction LUNC should go, instead following what community wants.

After seeing another collosal misuse of CP funds, which was the L1TF, LUNC Community should rather search for a Law Firm to claim these funds back.

And for a replacement development team (who do not require lawyers to code) as well.

12 Likes