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A US federal judge recently dismissed a lawsuit against decentralized finance (DeFi) platform PoolTogether. According to the ruling, the federal court system is not the right place to raise concerns about a DeFi startup.
CASE DISMISSED!!!!
https://t.co/HDAPQZe3Sx pic.twitter.com/SjcDnMnLIV
— Leighton (@lay2000lbs) June 7, 2023
U.S. Judge Frederick Block said that despite genuine misgivings about the startup, filing a lawsuit in federal court is not “the appropriate way to address them.” The judge also stated that plaintiff Joseph Kent had no right to initiate legal action because he “had not suffered any specific harm at the hands of the defendants.” The court order says:
“Therefore, the court considers that Kent has no right to bring a claim, and, accordingly, grants the defendants’ motions to dismiss the case on this basis. Alternative motions for arbitration are dismissed as moot.”
The lawsuit was filed by Kent back in October 2021 alleging that the DeFi startup violated New York state gambling laws by allowing people to evade financial regulations and defraud consumers. He also described the platform as “an old fashioned numbers racket”.
However, according to the judge, the injury Kent claims he suffered must be similar to the injury he hopes to find a remedy for in federal court. However, in this case, the judge stated that there had been a discrepancy. In the end, the case was dropped.
Despite the ruling, the judge said Kent “may take his claims to state court” and additional issues raised in the unanswered motions for dismissal should be “determined by the New York Court of Appeals.”
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Community members cheered for the decision, some even saying that their non-fungible token (NFT) now has utility, while others expressed their 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 ethers (ETH), which at the time was about $1.4 million, through the sale of PoolyNFT. The funds were used to fight the lawsuit, which some in the community saw as an attack on the DeFi sector as a whole.