By
Temitope Olatunji
April 18th, 2024
PoolTogether has described the case as lacking merit and a test of the core values of DeFi communities.
In less than a week of launching NFTs to fund its ongoing litigation, PoolTogether has sold NFT assets worth 470 ETH. The DeFi platform set out to raise 769 ETH to fund the class action suit brought against it. With about 25 days still to go, the NFT sales have exceeded 60% of the target amount.
If all NFTs are sold, the platform will have raised 1,076 ETH or $2.2 million. According to the minting website, funds from the sales will help cover the legal expenses of the case. Any unused funds at the end of the case will be converted for business purposes.
The Class Action Suit against PoolTogether and NFT Sales
Founded in 2019, PoolTogether allows users to deposit their crypto assets into the protocol. In return, the users get a ticket and have a chance to win a prize if their ticket is chosen.
The putative action suit against the company was filed by Joseph Kent, former technology lead for Senator Elizabeth Warren’s 2020 presidential campaign. Kent deposited Roughly $12 in USDC into the protocol. Afterward, he filed a motion against the project, Leighton Cusack and some other investors in the protocol.
According to Kent, the protocol violates New York’s prohibition against illegal lotteries. The amended complaint further alleges that the project “may never offer a positive expected value’ because 50% of the weekly prize is kept as reserve”. Kent is seeking compensation that far exceeds the amount he invested and the possible legal fees he can incur from the litigation.
In their defense, PoolTogether has stated the protocol runs on Ethereum and is not owned by anyone. The firm also noted, in its defense, that there is a clear distinction between the protocol and the company.
Why the Community Stepped Up for the NFT Sales
PoolTogether has described the case as lacking merit and a test of the core values of DeFi communities. The overwhelming support for its NFT sales underlines the fact that the community believes the same. A member of the community identified as Richard Liriano noted that a win, in this case, was a win for every DeFi protocol.
Also, Kent may have let off his aversion to crypto-assets stating that it was accelerating climate change and allowing fraudsters to exploit the financial system.