PoolTogether, a DeFi savings program, raised over $830,000 in five days through an NFT sale to pay its legal defense against a man who put $10 into the protocol and then went on to sue the company behind it for assisting an “unauthorized lottery scam.”
The DeFi App PoolTogether has raised $830,000.
The bitcoin community has backed the DeFi app PoolTogether, helping it raise roughly $830,000 for its legal fund.
PoolTogether, one of Ethereum’s early DeFi protocols, has turned to NFTs to fund its legal defense against a class-action lawsuit that might set a disastrous precedent for the whole DeFi industry. Last October, Joseph Kent, a former staffer for anti-crypto Democrat Senator Elizabeth Warren, filed a class-action lawsuit against the Delaware company PoolTogether Inc. for allegedly facilitating an “unauthorized lottery scheme” in New York. Kent put $10 into the protocol before alleging that PoolTogether Inc. was running an illegal prize-linked savings game in New York, where he lived.
PoolTogether is a DeFi savings solution that works similarly to Premium Bonds. DeFi users can deposit cash, and the protocol’s smart contracts utilize all submitted assets to generate yields in the DeFi ecosystem before handing out daily prizes to a limited number of users. PoolTogether first appeared on Ethereum and has expanded to include Polygon and Avalanche.
The Pooly Collection
On Thursday, PoolTogether debuted its Pooly NFT collection, featuring three NFTs priced at 0.1 ETH, 1 ETH, and 75 ETH. Since then, the collection has amassed 437.2 ETH (about $833,000 at current exchange rates) for its legal war chest. Some of the crypto industry’s most notable voices have lent their support to the effort, including Uniswap developer Hayden Adams, Ryan Sean Adams, and David Hoffman, co-founders of the popular Bankless podcast.
When PoolTogether co-founder Leighton Cusack announced the NFT crowdfunding attempt on Twitter, he claimed that the “allegations lack substance, but a comprehensive defense is still required.” PoolTogether states that its corporate body does not own or manage the underlying smart contract-based technology and only runs the interface via which users can use it. Furthermore, it emphasized that “no-loss” deposits made using the DeFi app are not lottery tickets.
The complaint filed against PoolTogether may have far-reaching implications for the DeFi industry since it attempts to question the frequently asserted decentralized nature of blockchain-based protocols. It might also set a significant precedent for DeFi developers’ liability for their written smart contracts, even if they’ve been deployed for years. The investigation is still in progress.