PoolTogether, a “no-loss lottery” DeFi platform, has currently accumulated over 470 ETH by selling non-fungible tokens (NFTs). Now, the sum is worth around $900,000, which will be used to fund the firm’s legal defense against a class-action lawsuit.
PoolTogether is more than halfway through its goal of raising 769 ETH (around $1.5 million to fight a lawsuit with “no merit.” As of yet, another 21 days remain before the NFT funding campaign ends.
Meanwhile, the PoolTogether NFT minting page reads, “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.”
Furthermore, the class-action lawsuit is led by former technology lead for Senator Elizabeth Warren’s 2020 presidential campaign, Joseph Kent. Kent deposited roughly $12 worth of stablecoins in the protocol. Later in January 2022, he sued its founder Leighton Cusack and several of its affiliated partners.
According to the amended complaint from February, Kent alleges that PoolTogether is operating an illegal lottery in New York. He argues that by keeping as much as 50% of each weekly prize as a reserve, the platform “may never offer a positive expected value.”
Kent is seeking compensation for twice his spending on buying PoolTogether lottery tickets. Also, he is asking for double the reasonable amount of attorney’s fees and legal costs.
PoolTogether claims to offer risk-free lotteries on users’ stablecoin deposits. In fact, it uses ticket buyers’ and liquidity providers’ capital for generating interest using DeFi protocols.
Further, the winner receives most of the yield, while the few runner-ups receive a smaller share. Also, all the other participants receive a full refund. According to its website, PoolTogether currently offers over $80,000 worth of weekly prices across its v3 and v4 pools.
Moreover, PoolTogether stated that the “allegations lack merit, but a thorough defense is still needed.” In addition, it pointed to an article from The Wall Street Journal in January, suggesting the lawsuit was “a deliberate effort to put some of the DeFi community’s core doctrines to the test.”
So far, PoolTogether has garnered much support for the campaign, with around 2,500 NFTs already sold. In fact, if all the NFTs are sold, the platform will raise 1,076 ETH, which is about 2.2 million.
The NFTs feature a purple animated avatar named “Pooly”, available in three types of rarity and pricing. Furthermore, the supporter tier consists of 10,000 NFTs priced at 0.1 ETH. Also, 1,000 lawyer tier NFTs are available at 1 ETH, and ten judge tier NFTs at 75 ETH apiece.
Meanwhile, prominent figures such as Chris Dixon, general partner of Andreessen Horowitz, have supported the cause by buying one of the 75 ETH judge NFTs.
Finally, the plaintiff has expressed a distaste for crypto as a whole, which explains why the crypto community has rallied behind PoolTogether. Kent is “greatly concerned” that the crypto industry is “accelerating climate change and allowing people to evade financial regulations and scam consumers.”