DeFi platform ‘PoolTogether’ has raised 470 ETH in NFT sales to fund its legal defence against a ‘putative class action lawsuit’.
The class-action lawsuit against PoolTogether is led by Joseph Kent who, after depositing roughly $12 worth of stablecoins into the protocol back in January, took action against the project.
For context, PoolTogether offers alleged “risk-free lotteries” on stablecoin deposits in the platform, whereby it generates interest using DeFi lending protocols as well as ticket-buyers’ and liquidity providers’ capital. Here, the winners of these lotteries receive the majority of the yielded interest, while a number of runner-ups receive a smaller share, and all other participants receive a full refund.
With this premise in mind, Kent’s complaint is based on the argument that PoolTogether is operating an ‘illegal lottery’ which ‘may never offer a positive expected value’ because it keeps as much as 50% of each weekly prize as a reserve. To remedy these alleged wrongdoings, Kent is seeking compensation worth double the value ($12) of funds he spent on purchasing lottery tickets, and double the ‘reasonable’ amount of money spent on attorney’s fees and other legal costs.
Although stating that Kent’s allegations “lack merit”, PoolTogether still believes a “full defence” is necessary – which is why it has launched a mass NFT collection of a purple animated avatar called ‘Pooly’. The assets come in three types of rarity and pricing, with the cheapest being 0.1 ETH and the most expensive being the 10-piece ‘Judge’ tier which is priced at 75 ETH per asset.
As per the time of writing, 2,470 NFTs have sold for a total of approximately 478.5 ETH (approximately $912,000), which is almost 2/3 of the estimated 769 ETH (or $1.5 million) which is needed to fight the lawsuit. As per the mint’s website, the company has another 21 days to generate these funds through its NFT sale.