Cryptocurrency NewsLawsuit against PoolTogether thrown out by US court

Lawsuit against PoolTogether thrown out by US court

To support PoolTogether’s legal defense, the defi community came together and raised $1.4 million through the sale of nonfungible tokens (NFTs) last year.

In a recent development on June 7, a judge in the United States dismissed the lawsuit against PoolTogether, ruling that the federal court system was not the appropriate venue to address concerns related to the decentralized finance startup.

Joseph Kent, a software engineer who had previously worked on Senator Elizabeth Warren’s 2020 electoral campaigns, accused PoolTogether of engaging in an illegal lottery. Kent claimed that he had invested $12 and demanded double the initial investment ($24), along with reimbursement for legal expenses incurred during the litigation process.

However, PoolTogether’s operational principle ensures that participants always have a positive expected value, as they can withdraw 100% of their principal at any time. This approach attracted users seeking an alternative method to save and potentially win rewards without risking their initial investment.

Nevertheless, the lawsuit has shed light on potential legal implications not only for PoolTogether but also for the broader DeFi landscape. The defi community rallied against PoolTogether, arguing that participating in an illegal lottery violates state laws and raises concerns for users involved in defi projects.

Following the dismissal of the lawsuit, community members expressed their excitement about the decision. Many perceive this ruling as reinvigorating their belief in the practical utility of nonfungible tokens (NFTs).

The case brought forward by Joseph Kent draws attention to the regulatory considerations surrounding the operation of defi platforms and their compliance with state laws. The accusation of conducting an illegal lottery may prompt regulators to evaluate the legal framework within which defi projects operate.

It’s worth mentioning that during that time, PoolTogether raised $1.4 million by selling PoolyNFTs to fund their defense against the lawsuit. Many people believed that the lawsuit was an attack on the entire defi sector, drawing parallels to the ongoing case involving the SEC, Binance, and Coinbase, which has united a significant portion of the wider crypto community.


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