Uniswap Lawsuit Dismissed Citing Regulatory Ambiguities
In Brief
A class action lawsuit targeting the leading decentralized exchange Uniswap has been dismissed by a U.S. District Court due to a lack of factual basis in the plaintiffs’ claims.
Judge Katherine Polk Failla noted that the identities of purported scam token issuers remain anonymous and that it is difficult to identify the alleged wrongdoers in the ecosystem.
Marvin Ammori, Chief Legal Officer at Uniswap, pointed out that the court’s decision aligns with a prevailing trend in legal perspectives.
A class action lawsuit targeting the leading decentralized exchange Uniswap has been dismissed by a U.S. District Court due to a lack of factual basis in the plaintiffs’ claims.
The ruling underscores the complexities of current crypto regulations and sheds light on the evolving legal landscape.
The lawsuit, initiated by six individuals who acquired tokens on Uniswap from December 2020 to March 2022, accused Uniswap, its founder, Hayden Adams, and venture capital firms Andreessen Horowitz and Paradigm of enabling fraudulent activities on the exchange. The individuals presented the case on behalf of a “nationwide class of users,” contending that Uniswap Labs managed liquidity pools within the protocol, including those established by the scammers responsible for their financial losses.
The lawsuit also contended that Uniswap should be subjected to registration with the Financial Industry Regulatory Authority and accused it of participating in the sale of unregistered securities.
Judge Katherine Polk Failla, who also heard the Securities and Exchange Commission’s case against Coinbase, emphasized Uniswap’s decentralized structure. She noted that the identities of purported scam token issuers remain anonymous and that it is difficult to identify the alleged wrongdoers in the ecosystem. This contributed to the plaintiff’s inability to specify a direct defendant.
The judge also revealed that the definitive classification of particular digital assets as commodities or securities remains unresolved.
Generally speaking, the court’s decision highlighted the challenges posed by the current state of crypto regulations. It lacks clarity and consistency, leading to uncertainties in legal proceedings.
Following the lawsuit’s dismissal, Marvin Ammori, Chief Legal Officer at Uniswap, pointed out that the court’s decision aligns with a prevailing trend in legal perspectives. He noted that the Uniswap protocol’s predominant lawful use exempts protocol developers from liability when others misuse it.
“In this regard, the Court sees merit in Defendants’ counterpoint that this case is more like an effort to hold a developer of self-driving cars liable for a third party’s use of the car to commit a traffic violation or to rob a bank,” states the ruling. “In those circumstances, one would not sue the car company for facilitating the wrongdoing; they would sue the individual who committed the wrong.”
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About The Author
Valeria is a reporter for Metaverse Post. She focuses on fundraises, AI, metaverse, digital fashion, NFTs, and everything web3-related. Valeria has a Master’s degree in Public Communications and is getting her second Major in International Business Management. She dedicates her free time to photography and fashion styling. At the age of 13, Valeria created her first fashion-focused blog, which developed her passion for journalism and style. She is based in northern Italy and often works remotely from different European cities. You can contact her at valerygoncharenko@mpost.io
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Valeria is a reporter for Metaverse Post. She focuses on fundraises, AI, metaverse, digital fashion, NFTs, and everything web3-related. Valeria has a Master’s degree in Public Communications and is getting her second Major in International Business Management. She dedicates her free time to photography and fashion styling. At the age of 13, Valeria created her first fashion-focused blog, which developed her passion for journalism and style. She is based in northern Italy and often works remotely from different European cities. You can contact her at valerygoncharenko@mpost.io
