U.S. Judge dismisses lawsuit against DeFi Platform PoolTogether

A Federal judge has dismissed a lawsuit against decentralized finance (DeFi) startup PoolTogether, stating that the federal court system was not an appropriate arena to air out concerns against the platform.

The case was filed by former congressional staffer Joe Kent in the U.S. District Court for the Eastern District of New York in October 2021. Kent, who previously worked for crypto sceptic Sen Elizabeth Warren (D-Mass), filed the suit as an apparent test case as legislators explored avenues to pursue legal actions against DeFi actors.

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 lawsuit, filed by Kent in October 2021, alleged the attack was “an old-fashioned numbers racket.”

The allegations against the platform that was raised include violating of Gambling laws in New York state, evading financial regulations and scamming consumers in the state. Importantly, the New York Constitution prohibits gambling, except for State-run lotteries, betting on horse races, the establishment of up to seven casinos, and certain bingo and lottery games to raise funds for charitable, religious, or not-for-profit organizations.

The judge mentioned that 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.

PoolTogether is a prize savings protocol, that enables consumers and customers to win by saving, depositing USDC for a chance to win, participating in daily prize draws and withdrawing of deposits. PoolTogether is a Prize Linked Savings account powered by the blockchain. It is considered Provably fair, Globally accessible, fully non-custodial open-source & secure and decentralized. It is mentioned that control of the PoolTogether Protocol rests solely in the hands of the community holding the POOL tokens.

Also, as mentioned in the judgment 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.“ Community members rejoiced over the decision. A Twitter handle Uncle Rewards expressed his support with a tweet saying “Finally one of my NFTs has a utility”.

Related Posts