In recent developments surrounding the ongoing class action lawsuit against DeFi project Fei Labs, new information has emerged regarding the widely reported seizure of the platform’s Discord server. Contrary to previous reports, it has now been clarified that the notice posted on the server was not a result of authorities seizing control. Instead, the purpose of the notice was to inform investors who were negatively affected by the project’s volatile launch event two years ago. This article will delve into the details of the situation, shedding light on the Fei Labs lawsuit, the recent settlement notice, and the subsequent clarifications.
Fei Labs’ counsel denies discord seizure
Fei Labs made headlines in April 2021 with the launch of its algorithmic stablecoin, Fei, and its associated governance token, Hunt. The unique feature of Fei’s stablecoin was its use of software that penalized sellers attempting to sell below its peg while rewarding those who bought below the peg. However, a bug during the launch caused the tokens to fall below their intended value. Nevertheless, Fei Labs managed to raise approximately $1.3 billion from the sale of Fei and Tribe tokens.
In April 2022, a class-action lawsuit was filed against Fei Labs and four of its developers in a San Francisco court. The lawsuit alleged that the sale of Fei and Tribe tokens constituted the sale of unregistered securities. After a legal battle, the parties involved reached a preliminary settlement in May 2023. It is worth noting that Fei Labs did not admit to any wrongdoing as part of the settlement.
The recent episode involves a settlement notice posted on Fei Labs’ Discord server. Screenshots of this notice circulated on Crypto Twitter, with some observers initially characterizing it as the result of a server seizure. However, it has now been clarified that the notice was posted by Fei Labs in collaboration with a settlement administrator to inform affected investors about the multimillion-dollar preliminary settlement.
The class-action lawsuit reaches preliminary settlement stage
The notice, referencing a legal NFT airdropped to investors, informed users that they have the opportunity to apply for a portion of the settlement fund. The fund, amounting to nearly $18 million, aims to cover legal fees and provide compensation to those who suffered losses due to Fei Labs’ shaky launch event. Claimants have until October 1 to submit their notices for compensation, and a final settlement hearing is scheduled for October 27 to determine the approval of the settlement.
Fei Labs responded to the situation by publishing a message on their website. In the statement, they confirmed that their Tribe DAO and Fei Protocol are no longer under development. They advised users to withdraw any funds they held in Tribe DAO-related contracts, indicating a winding down of these projects. The ongoing class action lawsuit against Fei Labs has taken a new turn with the clarification regarding the Discord server notice.
Contrary to initial reports, the notice was not the result of a server seizure but rather an effort to inform affected investors about the preliminary settlement. The lawsuit, stemming from Fei Labs’ volatile launch event, alleges the sale of unregistered securities. With the settlement fund in place, investors have the opportunity to apply for compensation, marking a significant development in the legal proceedings. As the final settlement hearing approaches, the outcome will determine the resolution of this complex case.
