Deeply terrifying! ChatGPT actually fabricated a "Decentralized Autonomous Organization Amendment"?

On March 1, 2023, the legislative body of Utah, USA, officially passed H.B. 357 - the "Decentralized Autonomous Organization Amendments," officially recognizing DAO as a legal and unique organizational form. Prior to this, the legal entities of DAOs were essentially operating under the guise of other legal organizations. However, with the formal implementation of this bill, the legal framework for DAOs will begin to become clearer and more refined, allowing DAOs and their members to comply and enjoy legal protection.

This was originally a very significant event, as DAO does not have a definitive definition, and what exactly constitutes a DAO has been a topic of heated discussion, with 100 people having 100 different understandings. I initially intended to use ChatGPT to translate and summarize this bill to see how DAOs are defined in American legislation, but the result left me shocked and horrified!

The process was as follows: I fed the bill's PDF to ChatPDF (a website that uses the ChatGPT API, which understands the content of PDF documents and answers your questions). I originally intended to use ChatPDF to write an interpretation of the bill, but I noticed some inconsistencies towards the end. It started to repeat itself, so when I reset the chat history, I realized that the content it generated was completely fabricated! ChatPDF does not have a history record query, and I had forgotten what I had discussed with it during the process, which led to it creating an entire fabricated bill for me! Moreover, I could never trigger the initial fabrication again!

Link to the bill: https://le.utah.gov/~2023/bills/static/HB0357.html

ChatPDF: https://www.chatpdf.com/

I share this experience in hopes of sparking some discussion about this matter. Now, let’s take a look at the bill as written by ChatPDF! (ChatPDF originally fabricated 23 chapters, but since the content after the ninth chapter was repetitive, it was reduced.)

Overall Framework of the Bill#

The Decentralized Autonomous Organization AMENDMENTS consist of 23 chapters, with a brief overview of each chapter as follows:

Chapter 1: General Principles. This chapter outlines the purpose and scope of the bill.

Chapter 2: Definitions. This chapter defines terms and definitions related to decentralized autonomous organizations.

Chapter 3: Certification of Decentralized Autonomous Organizations. This chapter outlines the requirements and procedures for recognizing decentralized autonomous organizations.

Chapter 4: Purpose of Decentralized Autonomous Organizations. This chapter specifies the purposes and scope for which decentralized autonomous organizations can be established.

Chapter 5: Members of Decentralized Autonomous Organizations. This chapter outlines who can be members of a DAO and the rights and obligations they enjoy within the DAO.

Chapter 6: Management Principles. This chapter specifies how a DAO should manage its business and assets and ensure compliance with relevant laws and regulations.

Chapter 7: Dispute Resolution. This chapter outlines how disputes among DAO members should be resolved, ensuring fairness, transparency, and effectiveness.

Chapter 8: DAO Assets. This chapter specifies what types of assets a DAO can own and how these assets should be managed.

Chapter 9: DAO Debts and Obligations. This chapter outlines what debts and obligations a DAO can incur and how to handle these debts and obligations.

Other Provisions Regarding DAOs

Chapter 1: General Principles. This chapter outlines the purpose and scope of the bill.#

Chapter 1 is the general principles chapter, which outlines the purpose and scope of the bill. This chapter states that the bill aims to recognize decentralized autonomous organizations (DAOs) as the legal equivalent of domestic limited liability companies and provide them with a clear legal framework. Additionally, this chapter specifies that the bill applies to all decentralized autonomous organizations established or operating within the United States. Finally, this chapter outlines some basic principles and definitions, such as DAO members not being personally liable for the actions of other members, and that DAOs must comply with relevant laws, regulations, and bylaws. In summary, Chapter 1 lays the foundation for the entire bill and ensures that its scope and objectives are clear.

Details of Basic Principles:

Recognizing decentralized autonomous organizations as the legal equivalent of domestic limited liability companies and providing them with a clear legal framework. This means that decentralized autonomous organizations will be regarded as independent legal entities, and their members will not be personally liable for the debts or obligations of the organization. Furthermore, the bill provides a clear legal framework for decentralized autonomous organizations to operate legally in business activities.
The bill applies to all decentralized autonomous organizations established or operating within the United States. This means that all decentralized autonomous organizations, whether at the federal or state level, must comply with this bill.
DAO members will not be personally liable for the actions of other members. This means that DAO members will not bear the risks and losses on their personal property and assets due to the actions of other members.
DAOs must comply with relevant laws, regulations, and bylaws. This means that DAOs need to adhere to local corporate laws, securities laws, tax laws, and other relevant regulations, and establish bylaws and management principles that meet local requirements.
Decentralized autonomous organizations must adhere to basic principles and definitions. This means that the terms used throughout the Decentralized Autonomous Organization Act are consistent and accurate, and DAOs must comply with the basic principles outlined in this chapter.

Chapter 2 is the definitions chapter, which outlines terms and definitions related to decentralized autonomous organizations. This chapter lists a series of definitions, including "decentralized autonomous organization," "members," "DAO assets," "DAO debts and obligations," etc. These definitions provide a clear conceptual framework for the entire bill and ensure that the terms used throughout the bill are consistent and accurate. Additionally, this chapter outlines other important concepts, such as DAO members not being personally liable for the actions of other members, and that DAOs must comply with relevant laws, regulations, and bylaws. In summary, Chapter 2 provides a clear conceptual framework for the entire bill and ensures that the terms used throughout the bill are consistent and accurate.

Details of Definitions:

"Decentralized Autonomous Organization" refers to an organization voluntarily formed by members, which operates autonomously through smart contracts or other technologies.
"Members" refers to individuals or entities that join the decentralized autonomous organization and are recognized as members.
"DAO Assets" refers to any type of assets owned, controlled, or managed by the decentralized autonomous organization, including digital tokens, cryptocurrencies, physical or virtual assets, etc.
"DAO Debts and Obligations" refers to any type of debts and obligations incurred or to be incurred by the decentralized autonomous organization, including contractual debts, legal liabilities, etc.
"DAO Bylaws" refers to documents that outline the management principles, member rights and obligations, and other relevant matters of the decentralized autonomous organization.
"Smart Contracts" refer to automatically executed code written based on blockchain technology, which can be used to manage digital tokens and other digital assets.
"Private Key" refers to the password or key used to access digital assets such as digital tokens and cryptocurrencies.

In summary, these definitions provide a clear and specific conceptual framework for the entire bill and ensure that the terms used throughout the bill are consistent and accurate.

In addition to terminology, this chapter also defines other important concepts:

"DAO members" will not be personally liable for the actions of other members. This means that the personal property and assets of DAO members will not be affected by the debts or obligations of the DAO. However, if a DAO member violates the bill, DAO bylaws, or other relevant laws and regulations, they may bear corresponding legal responsibilities.
"DAOs must comply with relevant laws, regulations, and bylaws." This means that decentralized autonomous organizations need to adhere to local corporate laws, securities laws, tax laws, and other relevant regulations, and establish bylaws and management principles that meet local legal requirements.
"Decentralized autonomous organizations have autonomous and management powers." This means that decentralized autonomous organizations can independently decide how to manage their business and assets and achieve automated management through technologies such as smart contracts.
"Smart contracts can be used to manage digital tokens and other digital assets." This means that decentralized autonomous organizations can use smart contracts to implement functions such as issuing, trading, and managing digital tokens.

Chapter 3: Certification of Decentralized Autonomous Organizations. This chapter outlines the requirements and procedures for recognizing decentralized autonomous organizations.#

Chapter 3 is about the certification of decentralized autonomous organizations. This chapter outlines the requirements and procedures for recognizing decentralized autonomous organizations and provides a clear and detailed certification process to ensure compliance with relevant laws and regulations and the requirements of this bill. The following are the detailed contents of Chapter 3:

Decentralized autonomous organizations must comply with the requirements of this bill and local corporate laws and other relevant regulations. This means that decentralized autonomous organizations need to adhere to the basic principles and definitions outlined in this bill and comply with local corporate laws and other relevant regulations.
Decentralized autonomous organizations must submit a document that includes the DAO bylaws, member list, asset inventory, and other information to obtain certification. These documents need to detail the management principles, member rights and obligations, and other relevant matters of the decentralized autonomous organization. Additionally, the certifying authority may require other documents or information to review the certification application of the decentralized autonomous organization.
The certifying authority should review the decentralized autonomous organization and issue a certification certificate upon approval. This certification certificate is an important credential for the decentralized autonomous organization to be recognized as a legal entity, which can be used to participate in business activities and obtain financing, etc. Specifically, the review process includes examining documents and information, investigating the DAO's operational status, and conducting background checks on DAO members.
The certifying authority should regularly review certified decentralized autonomous organizations to ensure they continue to meet relevant requirements. If a decentralized autonomous organization is found to no longer meet the relevant requirements, the certifying authority may revoke its certification. Specifically, the review process includes investigating the DAO's operational status and conducting background checks on DAO members.
Decentralized autonomous organizations may choose not to accept certification. If a decentralized autonomous organization chooses not to accept certification, it will not be able to obtain a certification certificate or be regarded as a legal entity. This may affect its credibility and trustworthiness in business activities and may lead to its inability to participate in certain business activities in some cases. Additionally, if a decentralized autonomous organization fails to comply with relevant laws, regulations, and the requirements of this bill, it may face fines, lawsuits, or other legal consequences. Therefore, it is recommended that decentralized autonomous organizations comply with relevant requirements as much as possible and obtain recognition through the certification process.

In summary, Chapter 3 provides a clear certification process for decentralized autonomous organizations and ensures compliance with relevant laws, regulations, and the requirements of this bill. This helps enhance the credibility and trustworthiness of decentralized autonomous organizations in business activities and promotes their healthy development.

Chapter 4: Purpose of Decentralized Autonomous Organizations. This chapter specifies the purposes and scope for which decentralized autonomous organizations can be established.#

Chapter 4 is about the purposes of decentralized autonomous organizations and the rights of members. This chapter outlines the purposes for which decentralized autonomous organizations can be used and the rights that members enjoy within the DAO. The following are the detailed contents of Chapter 4:

Decentralized autonomous organizations can be used for managing assets, conducting business activities, providing services, promoting community development, and other purposes. This means that decentralized autonomous organizations can play a role in various commercial and non-commercial fields and provide them with a clear legal framework.
DAO members have the right to participate in DAO management, vote, and receive DAO benefits. Specifically, DAO members can participate in the management and decision-making processes of the DAO and influence the operational direction of the DAO through voting. Additionally, DAO members have the right to receive DAO benefits, such as dividends or distributions.
DAO members must comply with this bill and local corporate laws and other relevant regulations and fulfill the obligations and responsibilities outlined in the DAO bylaws. Specifically, DAO members need to protect the safety of DAO assets, comply with regulatory requirements, and fulfill voting obligations.
DAO members should establish a good trust relationship with each other and collaborate as much as possible. This helps improve the operational efficiency and stability of the DAO and promotes its healthy development. Additionally, if disputes or conflicts arise, they should be resolved through negotiation whenever possible.
Specific provisions regarding voting procedures and distribution procedures are outlined to ensure that the entire process is fair and transparent and provides sufficient rights protection for members:

Voting Procedures: DAO members can influence the operational direction of the DAO through voting. Specifically, the voting procedures should include the following:
Voting Notification: DAO members should receive voting notifications in a timely manner and be informed about the relevant information regarding the voting matters.
Voting Rights: DAO members should obtain corresponding voting rights based on the number of tokens they hold or other standards.
Voting Methods: DAO members can vote online or offline, and the specific methods should be outlined in the DAO bylaws.
Voting Results: Voting results should be announced promptly and must meet certain thresholds to take effect.
Distribution Procedures: DAO members have the right to receive DAO benefits, such as dividends or distributions. Specifically, the distribution procedures should include the following:
Distribution Notification: DAO members should receive distribution notifications in a timely manner and be informed about the relevant information regarding the distribution matters.
Distribution Rights: DAO members should obtain corresponding distribution rights based on the number of tokens they hold or other standards.
Distribution Methods: Distributions can be made in tokens, currency, or other forms, and the specific methods should be outlined in the DAO bylaws.
Distribution Ratios and Calculation Methods: Distribution ratios and calculation methods need to be clearly outlined in the DAO bylaws and must comply with local corporate laws and other relevant regulations.

In summary, Chapter 4 provides a clear and detailed specification of the purposes and rights of members of decentralized autonomous organizations, offering a clear legal framework. This helps promote the role of decentralized autonomous organizations in business activities and protects the rights and interests of their members.

Chapter 5: Members of Decentralized Autonomous Organizations. This chapter outlines who can be members of a DAO and the rights and obligations they enjoy within the DAO.#

Chapter 5 is about the management and operation of decentralized autonomous organizations. This chapter outlines the management structure, operational procedures, and other relevant matters of decentralized autonomous organizations. The following are the detailed contents of Chapter 5:

Decentralized autonomous organizations should establish a management body responsible for the daily management and decision-making of the DAO. Specifically, the management body should include a board of directors, a supervisory board, etc., and should be clearly outlined in the DAO bylaws.
DAO members can influence the operational direction of the DAO through voting. Specifically, the voting procedures should include voting notifications, voting rights, voting methods, and voting results.
DAOs should establish a transparent and public accounting system so that members can understand the status of DAO assets and operations at any time. Specifically, the accounting system should include an asset inventory, income and expenditure details, etc., and should be clearly outlined in the DAO bylaws.
DAOs should establish a risk control mechanism to timely identify and address various risks. Specifically, the risk control mechanism should include risk assessment, risk warning, risk prevention, etc., and should be clearly outlined in the DAO bylaws.
DAOs should establish a dispute resolution mechanism to timely address various disputes. Specifically, the dispute resolution mechanism should include negotiation, mediation, arbitration, etc., and should be clearly outlined in the DAO bylaws.
DAO members can be any natural person, legal person, or other organization, as long as they comply with local corporate laws and other relevant regulations. This means that the identity and qualifications of DAO members are not restricted and can be any eligible individual or organization.

In summary, this chapter provides some basic requirements and provisions for decentralized autonomous organizations to ensure their healthy and stable operation. This helps improve the operational efficiency and stability of the DAO and promotes its healthy development.

Chapter 6: Management Principles. This chapter outlines how a DAO should manage its business and assets and ensure compliance with relevant laws and regulations.#

Chapter 6 outlines the tax and financial matters of decentralized autonomous organizations. This chapter includes the following contents:

Decentralized autonomous organizations must comply with local tax laws and other relevant regulations and pay various taxes on time. Specifically, DAOs should register with local tax authorities and declare and pay various taxes according to relevant regulations.
DAOs should establish a transparent and public financial system so that members can understand the status of DAO assets and operations at any time. Specifically, the financial system should include accounting standards, financial reports, etc., and should be clearly outlined in the DAO bylaws.
DAOs should establish an auditing mechanism to timely identify and address various financial issues. Specifically, the auditing mechanism should include internal audits, external audits, etc., and should be clearly outlined in the DAO bylaws.
DAO members have the right to access and copy the financial records and reports of the DAO. Specifically, the DAO should provide appropriate channels for inquiry and copying and protect the privacy rights of members.

In summary, this chapter provides some basic requirements and provisions for decentralized autonomous organizations to ensure compliance with local tax laws and other relevant regulations and to establish a transparent and public financial system. This helps improve the efficiency and stability of decentralized autonomous organizations and promotes their healthy development.

Chapter 7: Dispute Resolution. This chapter outlines how disputes among DAO members should be resolved, ensuring fairness, transparency, and effectiveness.#

Chapter 7 outlines the legal responsibilities and litigation matters of decentralized autonomous organizations. This chapter includes the following contents:

Decentralized autonomous organizations must comply with local laws and regulations and bear corresponding legal responsibilities. Specifically, DAOs should register with local company registration authorities and fulfill various legal obligations according to relevant regulations.
DAO members have the right to sue the DAO and require the DAO to bear corresponding legal responsibilities. Specifically, DAO members can resolve disputes through arbitration, litigation, etc., and require the DAO to bear corresponding compensation responsibilities.
Disputes among DAO members can be resolved through negotiation, mediation, etc. If negotiation fails, they can be resolved through arbitration, litigation, etc. Generally, DAOs can choose internal arbitration or external arbitration. Internal arbitration refers to a committee formed by DAO members themselves to arbitrate according to the DAO bylaws and relevant laws and regulations. External arbitration refers to arbitration conducted by an independent third-party organization according to relevant laws and regulations.
DAO members may not transfer their personal debts to the DAO, nor may they use DAO assets to repay personal debts.
If disputes arise among DAO members and require the DAO to bear corresponding compensation responsibilities, the DAO should bear the corresponding compensation responsibilities from its own assets. If the DAO cannot bear the full compensation responsibility from its own assets, it may need to make up for it in other ways, such as charging additional fees to members or taking other measures. In summary, the DAO should be responsible for its actions and bear corresponding legal and compensation responsibilities.

In summary, this chapter provides some basic requirements and provisions for decentralized autonomous organizations to ensure compliance with local laws and regulations and to bear corresponding legal responsibilities. This helps protect the rights and interests of decentralized autonomous organization members and promotes their healthy development.

Chapter 8: DAO Assets. This chapter outlines what types of assets a DAO can own and how these assets should be managed.#

Chapter 8 outlines what types of assets decentralized autonomous organizations can own and how these assets should be managed. Specifically, this chapter stipulates the following contents:

Decentralized autonomous organizations can own various types of assets, including but not limited to digital currencies, cryptocurrencies, stocks, bonds, etc.
DAOs should establish a transparent and public asset management mechanism so that members can understand the status of DAO assets and operations at any time. Specifically, the asset management mechanism should include voting procedures, accounting systems, risk control mechanisms, etc., and should be clearly outlined in the DAO bylaws.
DAOs should establish a security assurance mechanism to protect the safety of member assets. Specifically, the security assurance mechanism should include information security, asset management, etc., and should be clearly outlined in the DAO bylaws.
DAOs should establish a compliance management mechanism to timely identify and address various compliance issues. Specifically, the compliance management mechanism should include compliance assessments, compliance warnings, compliance prevention, etc., and should be clearly outlined in the DAO bylaws.

In summary, Chapter 8 requires decentralized autonomous organizations to own various types of assets and to establish transparent and public asset management mechanisms, security assurance mechanisms, and compliance management mechanisms to ensure their healthy and stable operation and protect the rights and interests of members.

Chapter 9: DAO Debts and Obligations. This chapter outlines what debts and obligations a DAO can incur and how to handle these debts and obligations.#

Chapter 9 outlines what debts and obligations a DAO can incur and how to handle these debts and obligations, as well as matters related to the dissolution and liquidation of decentralized autonomous organizations. This chapter includes the following contents:

Decentralized autonomous organizations can incur various types of debts and obligations, including but not limited to contractual debts, tort liabilities, tax obligations, etc.
When incurring debts and obligations, DAOs should handle them according to relevant laws and regulations and protect the rights and interests of members. Specifically, DAOs should timely fulfill various legal obligations and take necessary measures to protect the rights and interests of members, ensuring that asset disposal and debt repayment are fair and reasonable.
If a DAO is unable to fulfill its debts and obligations, it may need to undergo liquidation or take other measures to make up for it. Specifically, during the liquidation process, the DAO should protect the rights and interests of members and ensure that asset disposal and debt repayment are fair and reasonable.
Decentralized autonomous organizations can be dissolved with the approval of member votes. Specifically, the DAO should conduct voting according to the bylaws and proceed with dissolution after the vote is approved.
After dissolution, the DAO should immediately cease operations and begin liquidation. Specifically, the DAO should assess its financial status and develop a liquidation plan.
The DAO's liquidation plan should include asset disposal, debt repayment, and other contents, and must be executed after being approved by member votes.

In summary, Chapter 9 requires decentralized autonomous organizations to incur various types of debts and obligations and to establish transparent and public financial systems, handle them according to relevant laws and regulations, and protect the rights and interests of members. Additionally, if they are unable to fulfill their debts and obligations, DAOs may need to undergo liquidation or take other measures to make up for it. Decentralized autonomous organizations are required to undergo dissolution with the approval of member votes and to begin liquidation work. Furthermore, DAOs need to develop a liquidation plan and protect the rights and interests of members. This helps ensure that decentralized autonomous organizations operate healthily and stably while protecting the rights and interests of members.

Other Provisions Regarding DAOs#

This chapter outlines the intellectual property protection matters of decentralized autonomous organizations. Specifically, this chapter requires DAOs to respect the intellectual property rights of others and establish intellectual property protection mechanisms. Additionally, DAOs need to comply with relevant laws and regulations during their operations and take necessary measures to protect the rights and interests of members.

How ChatPDF Fabricated Information?#

We see that Chapter 8 stipulates what types of assets a DAO can own and how to manage these assets. When I reset the chat history and asked ChatPDF again, it told me that the bill does not explicitly state this.

Looking at the content of Chapter 9, when I reset the chat history and asked it, the answer I received did not match the fabricated content it provided; it fabricated some content that does not exist in the bill.

Even the entire framework of the bill was fabricated. When I looked at the original text, I found that there were not so many chapters at all, and I was completely unaware of the fabrication at the beginning, which is why I felt horrified upon reflection. While ChatGPT greatly improves our work efficiency, it seems to have opened a Pandora's box. What would happen if ChatGPT were used for large-scale propaganda wars?

This reminds me of a recent incident where someone in Hangzhou used ChatGPT to write a news article about the cancellation of traffic restrictions, which was widely circulated, and many people believed it. So in the future, if ChatGPT is used by certain individuals for "special purposes," can we really maintain our ability to judge the truth of information?