Uniswap Labs Settles Penalty of Only $170K With CFTC Due to its "Substantial Cooperation"
Uniswap Labs has settled charges from the Commodity Futures Trading Commission (CFTC) to the tune of $175,000.
The regulator said the fine was relatively light due to Uniswap Labs' "substantial cooperation."
In the settlement, Uniswap Labs did not admit or deny the allegations but agreed not to claim that the order "is without a factual basis."
According to the CFTC, Uniswap's website facilitated users trading tokens representing leveraged positions in Bitcoin and Ether through its platform. Around $21.5 million in leveraged tokens were allegedly traded through a website offering access to the Uniswap protocol.
“During the Relevant Period, Interface users transacted a notional value of approximately $21.5 million in trades involving Leveraged Tokens,” the CFTC said.
Miles Jennings, general counsel at Andreessen Horowitz, expressed support for the settlement, stating, "Simple lesson we should have already learned — your frontend should comply with the laws of the jurisdiction where it’s facilitating conduct."
Simple lesson we should have already learned — your frontend should comply with the laws of the jurisdiction where it’s facilitating conduct.
— miles jennings (@milesjennings) September 4, 2024
The CFTC continues to focus on regulating apps/frontends, not protocols. On businesses, not software. Good. https://t.co/W9BTKAcHJq
CFTC commissioner Summer Mersinger nonetheless opposed the decision to pursue Uniswap, arguing, “Through this settlement, the Commission appears to be taking the position that any DeFi platform could be liable for any and all conduct occurring on its protocol."
Uniswap responded to the charges by the regulator by removing certain tokens from its interface in July, citing the "evolving regulatory landscape."
In April, Uniswap received a Wells Notice from the US Securities and Exchange Commission (SEC). Uniswap responded by saying the SEC's legal arguments are "weak" and have been "refuted" by courts.
The exchange then strongly urged the SEC to abandon its attempt to include decentralized finance (DeFi) markets in its definition of an "exchange."
In a letter on 9 July, Uniswap cited a recent Supreme Court ruling on the Chevron doctrine, stating that the regulator could no longer use the “Chevron deference” to exert its power over the crypto industry.