A federal judge in Texas made a breach of contract judgment against Bancor Dao, which failed to respond to an online subpoena, operated a decentralized financial platform Bancor.
Judge Robert Pitman issued the verdict.
“The defendant donor failed to answer or otherwise defend himself within the allowed time, and the plaintiff proved the failure,” wrote Philip Delvin, a clerk of the district court.
The class action lawsuit involves investors who claim they lost tens of millions of dollars as the exchange failed to warn of liquidity issues during its 2022 retraction peak.
The clerk’s default input to Bancor. Source: Law360
According to the plaintiff File a lawsuit In May 2023, Bancor deceived investors about its impermanent loss protection mechanism for liquidity providers and claimed that its token is unregistered security.
They said Bancor’s ILP operates in the deficit and is trying to mask it by launching a new product, V3, that promises “some of the most competitive returns anywhere (…) without requiring users to take any risk.”
When liquidity providers deposit assets into the pool, impermanent losses occur in Defi’s automated market maker model, and one of the tokens loses value to the other in the pool.
bacteria pause Impermanent loss protection, citing the “hostile” market conditions in June 2022.
The plaintiff also argued that Bancor Dao is a “general partnership of non-legal persons” composed of VBNT token holders and can be sued in this capacity, according to To Law 360.
The case was previously completely dismissed because the deal developer was not in the United States and reopened in December.
The plaintiff said the Defi platform “appears to be registered in any jurisdiction and does not have a physical office, mailing address, senior executive, director or appointed agent.”
Bancor is an OnChain liquidity protocol that enables automated, decentralized exchanges across blockchains. Its total value is locked at $38 million, a figure that has dropped 98% since its peak in May 2021, according to Go to Defilama.
Related: If “limited liability” is denied, the lawsuit can cause disastrous catastrophicity to the DAO
The ruling is from a precedent in similar cases, Commodity Futures Trade Commission Win the default judgment Fight against Ooki Dao.
California federal judge Rule in November In cases involving unregistered securities, DAOS and its management members can be sued.
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