Key takeaways
- The CFTC has fined Uniswap Labs $175,000 for illegally offering crypto derivatives trading.
- Uniswap Labs’ leveraged tokens have been deemed unauthorized commodities transactions by the CFTC.
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The U.S. Commodity Futures Trading Commission (CFTC) has issued an order against Uniswap Labs for allegedly illegally offering crypto derivatives products through tokens equivalent to leveraged positions.
According to a CFTC statement, the exchange was fined $175,000 and ordered to stop violating the Commodity Exchange Act.
The U.S. regulator said Uniswap Labs developed and deployed a blockchain-based digital asset protocol that allows users to trade liquidity pools of digital assets. The company’s web interface provided access to hundreds of such pools, including leveraged tokens that provide exposure to cryptocurrencies like Ethereum (ETH) and Bitcoin (BTC).
The CFTC deemed these leveraged tokens to be commodity transactions that did not result in actual delivery within 28 days. Such offerings to ineligible contract participants are only permitted on CFTC-registered contract exchanges, which was not the case with Uniswap Labs, the statement added.
“Today’s action further demonstrates that the CFTC’s Enforcement Division will vigorously enforce the CEA as digital asset platforms and DeFi ecosystems evolve. DeFi operators must be vigilant to ensure that transactions comply with the law,” said Ian McGinley, CFTC Director of Enforcement.
The CFTC acknowledged Uniswap Labs’ cooperation during the investigation, resulting in a reduction in the civil monetary penalty.
Regulatory pressure in 2024
In April of this year, Uniswap Labs received a Wells Notice from the U.S. Securities and Exchange Commission (SEC). The regulator threatened to take enforcement action against the entity behind the decentralized exchange, accusing it of offering unregistered securities.
On this occasion, Hayden Adams, CEO of Uniswap Labs, expressed confidence that their operations are compliant with regulations and that their work “is on the right side of history.”
Additionally, he accused the SEC of letting “bad actors like FTX” go through while targeting good actors, namely Uniswap and Coinbase.
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