Legal structure
Permissionless (Distributed assets)¶
Overview¶
The legal architecture is designed to grant permissionless token holders direct economic exposure to the returns of the underlying assets, as well as access to the value of the assets in the event of liquidation, with institutional-grade bankruptcy remoteness, segregation and liquidation rights all while minimizing regulatory friction.
The basic legal and entity architecture of the AXC permissionless token (distributed asset) is as follows:
To achieve the goals of transferability, financial privacy, and regulatory compliance for permissionless tokens, the protocol utilizes a Master/Series DAO LLC structure. Shares of the underlying asset are purchased from an asset manager and beneficially owned by a specific Series DAO LLC, which operates under a Master DAO LLC.
For example, in the case of the permissionless Growth Yield Token, the Master DAO is RWAfi DAO LLC (a Marshall Islands non-profit entity filed with a single member). The Series DAO (RWAfi DAO LLC - Series 1) holds the assets and issues the ERC-20 tokens. AXC acts strictly as the technology provider, and receives a management fee for operating the token-related platform.
| Actor | Legal Domicile | Role |
|---|---|---|
| Whitelist Distributor | Various | Provides deposit and withdraw services in virtual assets for users |
| Master/Series DAO LLC (e.g. RWAfi DAO LLC / RWAfi DAO LLC - Series 1) | Marshall Islands | The Series LLC is the SPV legal entity that holds underlying assets and issues tokens. |
| Blockchain Service Provider (e.g. AXC) | Caymans | Provides support services |
| Underlying manager | Various | Manages the underlying asset according to investment strategy |
| Custodian | Hong Kong | Custodies assets on behalf of Series LLC |
Governing Legal Agreements¶
For the permissionless tokens, the relationships between the entities, the service providers, and the token holders are governed by a framework of legal contracts:
| Contract | Parties | Description |
|---|---|---|
| User agreement | Token holders and Whitelist distributors | Distributor platform’s User agreement to tokenholders |
| Terms and conditions contract | Token holders, Whitelist distributors and Series LLC | Governs basic obligations to tokenholders |
| Token memorandum | Token holders and Series LLC | Governs use of funds for the token |
| Custody agreement | Master LLC and Series LLC | Permits Master LLC to act on behalf of Series |
| Blockchain services contract | Series LLC and Blockchain service provider | Permits the Blockchain service provider to provide services to Series LLC |
| Standard broker-dealer contract | Custodian and Underlying Manager | Brokerage relationship for subscription and redemption |
SPV Structural Protections & Risk Mitigation:¶
Special Purpose Vehicle (SPV) Structure¶
Each individual fund is siloed into a separate Marshall Islands Series LLC. This SPV contains only the specific underlying assets and holds no external contracts other than those with token holders, the custodian, and essential service providers. To minimize legal risks associated with the recognition of the master/series structure across jurisdictions, all series holdings execute long-only strategies.
Bankruptcy Remoteness & Segregation¶
The legal architecture is explicitly designed to be bankruptcy remote:
Service Provider Isolation: The SPV is legally separated from AXC (the Blockchain service provider). Claims against AXC will not attach to the assets held within the SPV.
Cross-Liability Protection: Each fund maintains a separate balance sheet under Marshall Islands law. Because the funds are long-only, potential token holder claims cannot exceed the assets available in that specific series. To protect against the risk of cross-jurisdictional non-recognition of the master-series structure, if future funds employ strategies with potential excess liability, a completely separate Master DAO LLC will be set up.
Custodian Remoteness: Beneficial ownership of all assets remains with the SPV. Custodians are licensed trust businesses, ensuring that SPV assets are legally segregated from the custodian’s corporate holdings.
Liquidation Rights¶
While the tokens do not grant direct equity ownership or voting rights in the underlying fund, both the General Terms and Conditions and the Investor Addendum state that token holders are entitled to a pro-rata share of the assets held by the SPV in the event of an SPV liquidation.
The exact remedies available to token holders in case of liquidation is determined by cross-jurisdictional case law (see Penta Investment Advisers Ltd v Allied Weli Development Ltd [2017] HKCA 289; CACV 58/2016 ). Please consult a legal professional for advice for your specific situation.