Paradox Venture Would Be the First DAO with Investment in a Regulated Fintech Company

The legal firm Paradox Venture which specializes in fintech advisory in Mexico Legal Paradox announced that it is preparing the launch of its own investment fund Paradox Venture, which will have $2.5 million and will function as a Decentralized Autonomous Organization (DAO), a concept that operates through blockchain technology.

Carlos Valderrama, the founding partner of Legal Paradox, explained that when the project is completed, he would become the first figure of his type to be a minority shareholder of an Electronic Payment Fund Institution (IFPE), in this case, Sylon Capital, which obtained authorization on April 10th, 2023, under the terms of the Law to Regulate Financial Technology Institutions.

The lawyer specialized in fintech added that they have already made investments in five firms in the fintech and blockchain sector, including the aforementioned, plus two others that are about to close. However, he noted that the goal is to invest in 30 firms.

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Valderrama explained that setting up the fund on a DAO will allow Paradox Venture to have broad participation of investors, in a transparent and democratic way

That is because decisions will be made taking into account all participants, through a blockchain network, which will be defined later.

“Through blockchain, resources from an entire community can be brought together; each of those people contributes what they can, with the common goal of investing. That is a DAO, the great advantage it has is that it works with blockchain technology and therefore has the same characteristics, such as traceability and immutability of data,” explained Valderrama.

To do this, community members will have a smart contract or token, which will allow them to authenticate as shareholders of the organization. For the moment, Valderrama explained that tokens will be issued only to honorary shareholders to contribute to the consolidation of the fund.

Once the fund is consolidated and the network is defined, the firm has the goal of issuing 166 million tokens so that it can be listed on a cryptocurrency exchange market.

Creation of the DAO

For its constitution, Carlos Valderrama explained that the current Mexican regulatory framework already allows the operation of a figure of this type, which would be supported by the General Law of Commercial Companies, the Commercial Code, and the National Code of Civil and Family Procedures, where The information generated in a blockchain is recognized as evidence.

“We rely on all this legal infrastructure, in the coming months we will reveal how we did it and we will give exactly what the specific legal technical wording is,” he said.

He added that for the legal creation of the DAO, the figure is registered within the Public Registry, where its statutes define the fund as a decentralized blockchain organization.

On the other hand, Valderrama explained that Armando Betancourt, who was part of the Google team in Mexico, will also participate in this project, and will seek synergies with the region.

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(Featured image by Hitesh Choudhary via Unsplash)

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First published in EL ECONOMISTA. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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