- U.S. District Judge James Donato dismissed a class action lawsuit against Dfinity related to Internet Computer (ICP) tokens, citing time limitation issues.
- The lawsuit, filed in August 2021, exceeded the three-year statute of repose as tokens were initially offered in February 2017.
- Investors have until April 8 to amend their complaint or face final dismissal under federal civil procedure rules.
A California federal judge has dismissed a class action lawsuit against Dfinity Foundation, developer of Internet Computer (ICP), ruling that investors’ claims were filed well beyond the required legal timeframe. The securities case collapsed after U.S. District Judge James Donato determined the lawsuit was “time-barred” under federal law, arriving one year and six months past the deadline.
Judge Donato granted Dfinity’s motion to dismiss on Tuesday, citing the Securities Exchange Act’s three-year statute of repose. The court accepted the defendant’s argument that ICP tokens were first offered to the public in February 2017, which placed the August 2021 investor lawsuit well outside the required filing period.
The plaintiffs, now represented by Selendy Gay PLLC, failed to counter this timing argument in their submissions to the court. Judge Donato wrote that dismissal was “consequently warranted” due to this lack of response.
Beyond the timing issues, the court also rejected the investors’ fraud claims against Dominic Williams, founder of Dfinity. The judge dismissed the argument that Williams “necessarily had knowledge” of token distribution problems simply because of his leadership position.
The case has been marked by significant legal controversy. The plaintiffs were initially represented by Freedman Normand Friedland LLP (formerly Roche Freedman) when the lawsuit was first filed. However, the proceedings faced months of delays after Kyle Roche, a former partner at the crypto law firm, was allegedly recorded boasting about using litigation to gather confidential information on cryptocurrency companies.
Further complications arose when the founding partners of the law firm later engaged in their own legal battle over approximately $60 million worth of tokens issued by Ava Labs, according to a 2023 report from Reuters.
The original lawsuit alleged that Dfinity manipulated the digital asset market and artificially inflated ICP token prices following its May 2021 trading debut.
Despite dismissing the case, Judge Donato has provided the investors with a final opportunity to amend their complaint by April 8. Failure to meet this deadline will result in dismissal under federal rules on civil procedure.
Representatives from Selendy Gay PLLC, Freedman Normand Friedland, and the Dfinity Foundation did not immediately respond to requests for comment on the ruling.
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