On June 1, PoolTogether, a DeFi platform, raised 470.90 ETH via NFT sales to assist fund its legal defence against a bogus class action lawsuit. Joseph Kent, the former technology director for Senator Elizabeth Warren’s 2020 presidential campaign, filed the class-action lawsuit against PoolTogether, its creator Leighton Cusack in January after investing about $12 worth of stablecoins into the protocol.
Kent claims that PoolTogether is running an unlawful lottery in New York, and that the platform “may never deliver a positive anticipated value” since it keeps up to 50% of each weekly win as a reserve, according to an updated lawsuit filed in February. He is seeking compensation equal to double the amount he spent on lottery tickets in PoolTogether, as well as twice the fair amount of attorney’s fees and legal costs.
PoolTogether has raised more than half of its target of 769 ETH (about $1.5 million) to battle a lawsuit it claims has “no merit.” Only 21 days are left before the NFT funding campaign ends. On its NFT minting page, it stated:
“PoolTogether Inc. is a defendant in a putative class action lawsuit. A person deposited the equivalent value of $12.00 into the protocol and is now suing PoolTogether Inc. and others for substantial damages.”
With 2,416 NFTs sold for a total of 470.90 ETH, which is now valued at $911,959, the PoolTogether community continues to show strong support for the campaign. If the platform ends up selling all the NFTs, it will raise 1,076 ETH ($2.2 million) at the end of the campaign.
The NFTs have a purple animated avatar dubbed “Pooly” and are available in three levels of rarity and pricing: the supporter tier has 10,000 NFTs for 0.1 ETH each, the lawyer tier has 1000 NFTs for 1 ETH each, and the judge tier has 10 NFTs for 75 ETH each. General partner a16z Chris Dixon, a well-known figure in the community, has also contributed to the cause by purchasing one of the 75 ETH judge available NFTs.
The complainant also expresses a dislike for cryptocurrency in general, which might explain why the community has united around PoolTogether. Kent is “gravely concerned” that the cryptocurrency industry is “accelerating climate change and allowing people to evade financial regulations and scam consumers.”
PoolTogether promises to offer risk-free lotteries on stablecoin deposits by generating interest with the money of ticket purchasers and liquidity providers using DeFi lending protocols. The lottery winner receives the majority of the proceeds, while the runner-ups receive a smaller portion. All other participants will be refunded in full. PoolTogether stated that the “allegations lack merit but a thorough defence is still needed”.
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