PoolTogether, a so-called “no-loss lottery” decentralized finance (DeFi) platform, collected 470.90 Ether (ETH) via the sale of nonfungible tokens (NFTs) to fund its defense against a prospective class action lawsuit.
This implies PoolTogether is well on its way to achieving its goal of gathering at least 769 ETH (about $1.5 million at the time of writing) to defend itself against a “meritless” lawsuit. The platform has 21 days remaining till the NFT fundraising campaign concludes. 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.”
Joseph Kent, the former head of technology for Senator Elizabeth Warren’s 2020 presidential campaign, is organizing the class-action lawsuit. In January, Ken filed a lawsuit against the project, its founder Leighton Cusack, and a number of its affiliated partners after putting around $12 in stablecoins in the system.
Kent argues in a February complaint that PoolTogether is operating an illegal lottery in New York and that the site “can not ever produce a positive expected value” because it puts up to 50 percent of each weekly award in reserve.
Kent is seeking double the amount he spent on lottery tickets in PoolTogether, as well as double the reasonable amount of attorney’s fees and court costs.
PoolTogether offers to deliver risk-free lotteries on stablecoin deposits on the platform by earning interest on ticket buyers’ and liquidity suppliers’ funds using DeFi lending protocols.
The winner of the lottery receives the lion’s share of the produce, while the runners-up get a smaller share. All other participants are reimbursed in full. According to its website, PoolTogether now offers weekly awards totalling $80,436 across its v3 and v4 pools.
PoolTogether noted that the “allegations lack merit but a thorough defense is still needed” and quoted a Wall Street Journal article from January stating that the lawsuit seems to be “to be a deliberate effort to put some of the DeFi community’s core doctrines to the test.”
The community has shown tremendous support for the campaign so far, as 2,416 NFTs have been sold for a total of 470.90 ETH, which is presently valued at $911,959. If all NFTs are sold, the platform will get 1,076 ETH, or around $2.2 million.
The NFTs are accessible in three levels of rarity and pricing, with the supporter tier consisting of 10,000 NFTs priced at 0.1 ETH each, the lawyer tier consisting of 1,000 NFTs priced at 1 ETH each token, and the judge tier consisting of 10 NFTs priced at 75 ETH apiece.
Chris Dixon, general partner at Andreessen Horowitz, and other notable figures in the industry have contributed by obtaining one of the 75 ETH evaluating NFTs.
Notably, the complaint shows a general distaste for bitcoin, which may explain why the community has rallied behind PoolTogether. Kent is reportedly “very concerned” that the bitcoin sector “accelerates climate change and enables people to avoid financial regulations and defraud clients.”