Federal Judge Dismisses Class Action Lawsuit Against Uniswap, Citing Decentralization
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In a new court ruling, a federal judge has dismissed a class action lawsuit filed against leading decentralized cryptocurrency exchange Uniswap. The judge’s opinion underscores the difficulties of regulating decentralized finance (DeFi) protocols.
Mike Wawszczak, a Twitter user, highlighted select passages from the ruling on Twitter this week. In dismissing the case, the judge stated that due to Uniswap’s decentralized nature, there is “no identifiable defendant” that can be held liable.
Judge finds that title does not pass to the pool (meaning, the smart contract devs and/or DAO token holders) when you deposit your tokens into a smart contract pic.twitter.com/X8B0tFbHvC
— Mike Wawszczak (@mikewawszczak) August 30, 2023
The judge further added that the current state of cryptocurrency regulation leaves aggrieved parties without legal recourse when dealing with decentralized protocols like Uniswap.
Judge pushed against SEC’s approach
Wawszczak noted the ruling contains powerful language pushing back against the SEC’s expansive approach to crypto regulation.
For example, the judge wrote, “It defies logic that a drafter of computer code underlying a particular software platform could be liable under Section 29(b) for a third-party’s misuse of that platform.”
The judge also found that when users deposit tokens into a DeFi protocol like Uniswap, ownership of the tokens does not transfer to the developers or token holders operating the protocol.
The dismissal represents a significant legal win for the DeFi space, which has faced growing regulatory pressure. By recognizing the inherent difficulties in imposing regulations designed for centralized entities on decentralized protocols, the ruling could influence future policymaking and enforcement actions.
Filed under: Bitcoin - @ August 31, 2023 5:06 am