PoolTogether Lawsuit Dismissed By US Judge

In a landmark decision for the DeFi sector, a U.S. district court judge has dismissed an ongoing lawsuit against the DeFi protocol PoolTogether.

In 2021, Joseph Kent had accused PoolTogether and several other entities of operating an “illegal lottery” in New York. However, the judge ruled that Kent had suffered no concrete harm from the defendants’ actions.

“While Kent no doubt has genuine concerns about PoolTogether—including its legality under New York law—a suit in federal court is not an appropriate way to address them,” Judge Block wrote.

The ruling hasn’t improved investor sentiment around the project’s POOL governance token, which is down 10% in the past week.

No-loss Lottery

PoolTogether operates by pooling users’ crypto assets, which are then sent to a lending protocol like Compound to earn yield. Users can withdraw their initial deposits at any time, with randomly chosen winners also earning a share of the income generated.

According to court documents, PoolTogether has received approximately $122M in deposits since its inception and has distributed nearly $4.3M as prizes.

To cover legal expenses, PoolTogether launched an NFT collection called Pooly last year. The sale raised $1.92M, surpassing its $1.41M funding goal.

PoolTogether Launches NFT Sale to Fund Ongoing Litigation

PoolTogether hopes to raise money for ongoing legal expenses through the sale of ‘Pooly’ NFTs.

The decision has been hailed as a significant victory by the DeFi community. However, the sector continues to face regulatory challenges.

Just this week, the SEC referred to Coinbase’s non-custodial wallet as an ‘unlicensed broker’ in a court filing.