A U.S. District Judge has thrown out a class-action lawsuit targeting Uniswap, ruling that the decentralized finance (DeFi) platform bears no responsibility for scam tokens traded on its exchange.
According to a report by André Beganski for Decrypt, the lawsuit, led by trader Nessa Risley and representing a group of Uniswap users, alleged that the platform’s developers and investors had violated securities laws. The suit specifically claimed that Uniswap acted as an unregistered broker and dealer, facilitated the trading of unregistered securities, and enabled token issuers to defraud investors.
The tokens implicated in the lawsuit were Matrix Samurai (MXS), Rocket Bunny (BUNNY), and Alphawolf Finance (AWF). Judge Katherine Polk Failla, presiding over the case, emphasized that the real issue was the anonymity of the token issuers. She stated that in a more transparent world, the plaintiffs would ideally be able to take legal action directly against the actual issuers of these fraudulent tokens.
Judge Failla pointed out that Uniswap’s capability to charge transaction fees and its governance tokens were not adequate grounds to hold the platform legally accountable. She suggested that the issues raised by the plaintiffs would be more suitably addressed through legislative channels rather than by stretching existing federal securities laws to fit the case.
The judge also made a clear distinction between the smart contracts that are fundamental to Uniswap’s operations and the code that supports liquidity pools, which individual token issuers establish. She acknowledged the absence of established case law concerning DeFi protocols and remarked that the legal landscape surrounding these platforms is still evolving.
Lastly, Judge Failla dismissed claims against Uniswap under state laws in North Carolina, Idaho, and New York without prejudice, leaving the door open for potential future legal challenges in those states.