A US district judge has made a significant ruling in a class-action lawsuit against members of the bZX DAO, finding that the ability for developers to upgrade a smart contract where the key is held by a single developer constitutes a custodial arrangement. Defendants claimed that transactions in bZX protocol were noncustodial as users could keep custody of their assets, but a successful phishing attack made this distinction meaningless.
The ruling could potentially affect developers with multisigs, meaning that DeFi platforms using such technology may be seen as custodial platforms and would need to obtain necessary custody licenses to comply with the law. Legal experts have emphasized the importance of this ruling in the DAO space.
