DeFi App sells $830,000 in NFTs for $10 Lawsuit Guy

PoolTogether raises $830,000 for DeFi App

The crypto community rallied behind PoolTogether and helped it raise over $830,000 to fund its legal war chest.

PoolTogether, one of Ethereum’s earliest DeFi protocols, has turned to NFTs to raise funds for its legal defense against a class-action lawsuit that could set an unwelcome precedent for the whole DeFi industry. Last October, a software engineer and former staffer for the anti-crypto Democrat Senator Elizabeth Warren named Joseph Kent filed a class-action lawsuit against the Delaware company PoolTogether Inc. for allegedly enabling an “unauthorized lottery scheme” in the state of New York. Kent Deposit $10PoolTogether Inc. claimed then that the protocol contained cryptocurrency worth. He also claimed that PoolTogether Inc. ran an illegal prize-linked saving game in New York.

PoolTogether works in a similar manner to Premium Bonds. DeFi users can deposit funds, the protocol’s smart contracts put all deposited funds to work in the DeFi ecosystem to capture yields, and then pay out daily prizes to a select number of users. PoolTogether started on Ethereum and has since expanded into Polygon, Avalanche and Polygon.

PoolTogether has released its Pooly NFT Collection Thursday. It offers three NFTs at varying price levels: 0.1, 1 and 75 Ethereum. At current prices, the collection has raised 437.2 ETH which is approximately $833,000 for its legal war chest. The campaign has received support from some of the crypto industry’s leading voices, including Uniswap creator Hayden Adams and the co-founders of the popular BankruptPodcast, Ryan Sean Adams and David Hoffman

Leighton Cusack, PoolTogether cofounder, announced the NFT crowdfunding campaign on Twitter said that the “allegations lack merit but a thorough defense is still needed.” In its defense, PoolTogether is claiming that its corporate entity doesn’t own or control the underlying smart contract-based protocol and only runs the interface that grants users access to it. Moreover, it also argued that the DeFi app’s “no-loss” deposits don’t qualify as lottery tickets.

As it seeks to question the decentralized nature of many blockchain-based protocols, the case against PoolTogether could have a significant impact on the whole DeFi industry. It could also set an important precedent concerning DeFi coders’ liability for the smart contracts they’ve coded even years after deploying them. This is a ongoing case. 

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