The decentralized finance (DeFi) platform called “lossless lottery”, PoolTogether has raised 470.90 Ether (ETH) through the sale of non-fungible tokens (NFTs) to fund its legal defense against a putative class action lawsuit..
That means PoolTogether is more than halfway to its goal of raising at least 769 ETH, worth roughly $1.5 million at the time of writing, to fight what it calls a lawsuit that has “no merit”. The platform has another 21 days left before the NFT funding campaign ends. He noted on his NFT minting page that:
“PoolTogether Inc. is a defendant in a putative class action lawsuit. One person deposited the equivalent of $12.00 in value into the protocol and is now suing PoolTogether Inc. and others for substantial damages.”
The class-action lawsuit is led by Sen. Elizabeth Warren’s former tech chief for the 2020 presidential campaign, Joseph Kent.. After depositing roughly $12 worth of stablecoins into the protocol, Ken took action against the project, its founder Leighton Cusack, and several of his affiliate partners in January.
According to an amended complaint from February, Kent alleges that PoolTogether is operating an illegal lottery in New York and argues that the platform “can never deliver positive expected value” due to holding up to 50% of each weekly prize pool..
Kent seeks compensation for twice the value of the funds it spent to purchase lottery tickets from PoolTogether, as well as twice the reasonable amount of attorneys’ fees and costs of legal action..
PoolTogether claims to offer risk-free lotteries on stablecoin deposits on the platform, using capital from ticket buyers and liquidity providers to generate interest through DeFi lending protocols..
The lottery winner receives the lion’s share of the performance, while a handful of runners-up receive a smaller share. All other participants receive a full refund. According to the PoolTogether website, it is currently offering $80,436 worth of weekly prizes in its v3 and v4 syndicates.
PoolTogether said the “accusations are without merit, but a thorough defense is still needed” and pointed to a Wall Street Journal article in January, stating that the lawsuit looks like “a deliberate effort to test some of the fundamental doctrines of the DeFi community”.
Until now, the community has shown strong support for the campaign, with 2,416 NFTs sold for a total of 470.90 ETH, worth $911,959 at the time of writing this article. If all NFTs are sold, the platform will have raised 1,076 ETH, or about $2.2 million.
NFTs represent a purple animated avatar named Pooly and come in three types of rarity and price. The support level consisting of 10,000 NFT costs 0.1 ETH each; the lawyer level, from 1,000 NFT to 1 ETH per token; and the judge level of 10 NFTs in total that go for 75 ETH each.
Prominent figures in the space such as Andreessen Horowitz’s general partner, Chris Dixon, have also supported the cause by buying one of the judge’s 75 ETH NFTs.
We just bought a 75 ETH Pooly Judge to support. https://t.co/MCxTMIJUI7 https://t.co/IhrpOR2WXT
— cdixon.eth (@cdixon) May 27, 2022
We just bought a 75 ETH Pooly Judge to support. https://t.co/MCxTMIJUI7 https://t.co/IhrpOR2WXT
Notably, the plaintiff also outlines a distaste for cryptocurrencies as a whole, which may explain why the community has rallied behind PoolTogether.. Kent describes himself as “gravely concerned” that the cryptocurrency sector is “accelerating climate change and allowing people to evade financial regulations and rip off consumers.”
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