The Southern District of New York has dismissed a class-action lawsuit against Uniswap Labs, its CEO Hayden Adams, the Uniswap Foundation, and decentralized exchange venture capitalists.
A user group led by Nessa Risley filed a complaint in early 2022. They accused the developer of the popular DEX and other defendants for non-compliance with securities laws resulting in losses.
The plaintiffs alleged that the exchange and other defendants in the lawsuit offered and sold unregistered securities in the form of digital assets, including the UNI governance token.
Among other accusations, they pointed out the illegal activities of the platform as a broker-dealer. Investors also stated that Uniswap Labs did not make adequate efforts to prevent fraudulent practices. rug-pull and Pump & Dump with a row of coins.
“Due to the decentralized nature of the protocol, the identities of scam token issuers are virtually unknown and indeterminate, resulting in plaintiffs receiving established damages but no identifiable defendant,” Judge Katherine Polk Failla said in a statement.
In her opinion, investors filed a lawsuit with the expectation that the court would ignore “the fact that the current state of regulation of cryptocurrencies does not leave them the opportunity to seek help.” However, that doesn’t give them reason to blame Uniswap for their losses, she said.
According to the judge’s decision, due to the current regulatory framework, it remains to be “finally determined” whether cryptocurrencies are securities, commodities, or something else. Failla recommended that plaintiffs address questions regarding relevant federal legislation to the US Congress.
It ruled that despite Uniswap operating as a commercial business, there is no centralized platform ownership structure.
“Uniswap is mostly used legally, and the developers of the protocol are not responsible for the abuse of other parties,” the judge emphasized.
In this respect, the accusations against the exchange are similar to those against services like Venmo or Zelle for payments on drug deals. It’s not the platform’s fault, but whoever is responsible for the scam token, Failla added.
Recall that in December 2022, Adam Cochran, a partner at Cinneamhain Ventures, admitted that Uniswap would implement user verification in the future.
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