San Francisco Court Seizes Fei Protocol’s Discord In Settlement
In a groundbreaking development, the San Francisco Superior Court has taken control of Fei Protocol’s Discord server as part of a class action settlement. Fei Protocol, a decentralized stablecoin project known for its native algorithmic stablecoin FEI, which is backed by a range of coins including DAI, ethereum (ETH), and USDC, has been embroiled in a legal battle that has now resulted in a $17.8 million compensation fund.
Looks like @feiprotocol's discord has been taken over by San Fransisco's superior courts
This is the first I've personally seen courts take over a discord, is this common?
A link to the class action — https://t.co/fD20xLofTX pic.twitter.com/5HI1EpFZp2
— Julian Traversa (@TraversaJulian) July 7, 2023
Class Action Lawsuit
The settlement, proposed in response to a class action lawsuit against Fei Protocol, aims to reimburse all users who purchased FEI or TRIBE tokens during the Protocol’s Genesis Event held from March 31 to April 3, 2021. The lawsuit alleges that the sale of FEI and TRIBE tokens during the Genesis Event violated the Securities Act of 1933, constituting the sale of unregistered securities. The plaintiff, Jonathan Shomroni, argues that individuals who directly acquired these tokens from Fei Protocol during the Genesis Event are entitled to compensation.
What distinguishes this settlement is the court’s innovative use of non-fungible tokens (NFTs) as a form of legal notice. The NFTs will be distributed to relevant parties via airdrops and minted on OpenSea, a popular NFT marketplace. This decision not only underscores the growing potential for blockchain technology within the legal system but also sets a precedent for utilizing NFTs and blockchain in future legal proceedings.
Investigations Dispel Scam Allegations
While skeptics initially raised concerns that the takeover of Fei Protocol’s Discord server was the work of malicious actors, subsequent investigations indicate that the lawsuit is a genuine legal process rather than a scam or a hacked Discord situation. No evidence of web3 phishing or approval abuse within the Discord server has been uncovered. Instead, it appears that the court may be collecting physical addresses from claimants for communication purposes.
Before the settlement can be finalized and payments distributed, a hearing is scheduled for October 27, 2023, during which the court will decide whether to approve the proposed settlement. Lawyers representing the class members have also requested approximately $4.5 million in attorneys’ fees and costs associated with investigating the facts, prosecuting the case, and negotiating the settlement.
The plaintiff who initiated the claims on behalf of the class members has additionally requested a service award of up to $10,000. If approved, these fees, costs, and service awards would constitute approximately 25% of the total settlement fund. However, the defendants have denied any wrongdoing, and thus far, the court has not found any evidence to support their claim of innocence or to warrant approval of the settlement.
