Uniswap is one of the biggest decentralized exchanges in crypto sector. The DEX was facing a class-action lawsuit filed at the Southern District Court of New York. However, the presiding judge on the case has dismissed the lawsuit.
The class-action lawsuit was directed at Uniswap Labs, venture, foundation, and venture. The plaintiff in the case argued in the court that they suffered from losses on account of scam token listings on the platform.
On this account, Judge Katherine Polk Failla directed the plaintiffs to file their complaint at Congress. Judge Failla is also presiding over the case brought by Securities and Exchange Commission against Coinbase exchange.
The class-action lawsuit against Uniswap was initiated by 6 investors who were trading on the platform during 2020 and 2022. They instigated the case on behalf of Uniswap investors across the country. They argued in the court that Uniswap was in-charge of liquidity pools amongst the ones that were run by scammers.
The plaintiffs in the case against Uniswap called for recission or revocation of smart contracts that led them to purchase scam tokens. At the same time, they demanded compensation by invoking Securities Act of 1933 and Securities Exchange Act of 1934.
They retained that their investment was warranted on account of Uniswap holding funds for liquidity providers and newly minted tokens in the form of proprietary contracts.
At the same time, they maintained that Uniswaps issued liquidity tokens when new pools were created and controlled the transactions through routers. At the same time, they claimed that Uniswap held around 88% of governance tokens for these LPs.
However, the plaintiffs did not back their last claims with evidence. Ruling on the matter, Judge remarked that the both parties were not aware of the scammers’ identities.
Securities Act does not Apply to Uniswap Lawsuit
The Judge for the case ordained that Securities Act invoked by the plaintiffs does not cover the legal basis for the lawsuit to continue. She further added that the Court was limited by the current state of insufficient crypto regulations such that it would otherwise entertain their specified claims.
More importantly, the Judge remarked that the application of Federal Securities laws in this matter stretches the boundaries of existing legislative guidelines.
In addition, the court added additional remarks on the matter while maintaining that the computer code or software service provider in this case cannot be held liable under Section 29(b). This section could charge the decentralized protocol with third-party misuse if approved by the court. She also cited a dismissed class-action lawsuit against Coinbase in 2022 that alleged unregistered security sales.
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