The DeFi community funded the protocol’s legal defense through a $1.4 million nonfungible token sale in 2022.
A United States judge recently dismissed a lawsuit against the decentralized finance (DeFi) platform PoolTogether. According to the ruling, the federal court system is not the correct place to air concerns against the DeFi startup.
CASE DISMISSED!!!!
https://t.co/HDApQZe3Sx pic.twitter.com/SjcDnMnLIV
— Leighton (@lay2000lbs) June 7, 2023
U.S. district court Judge Frederic Block said that despite having genuine concerns about the startup, a lawsuit in a federal court is not “an appropriate way to address them.“ The judge also said that the plaintiff, Joseph Kent, does not have standing to pursue a lawsuit because he “suffered no concrete harm at the hands of the defendants.” The court order stated:
“Therefore, the Court holds that Kent lacks standing to sue and, accordingly, grants the defendants’ motions to dismiss on that ground. The alternative motions to compel arbitration are denied as moot.”
The lawsuit, filed by Kent in October 2021, alleged the DeFi startup violated gambling laws in New York state by letting people evade financial regulations and scam consumers. It also described the platform as “an old-fashioned numbers racket.”
However, according to the judge, the injury Kent claims to have suffered must be similar to the injuries he hopes to find a remedy for in the court. However, in this case, the judge said there was a mismatch. In the end, the case was dismissed.
Despite the decision, the judge said that Kent is “free to pursue his claims in state court” and ancillary issues raised in the dismissal motions that remain unanswered should be “resolved by the New York Court of Appeals.“
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Community members rejoiced over the decision, with some saying that their nonfungible token (NFT) now has utility and others expressing support.
Finally, some great news in cryptolaw this week. @lay2000lbs is one of the best actors in the industry and I was truly disheartened when the case was brought against both @PoolTogether_ and him personally. Great work from @ohaiom! https://t.co/5K0vqyK8x6
— Nick Pullman (@NickPullmanEsq) June 7, 2023
In 2022, the DeFi startup raised 769 Ether (ETH), around $1.4 million at the time, by selling PoolyNFTs. The funds were used to fight against the lawsuit, which some community members believed to be an attack on the DeFi sector as a whole.
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