- The CFTC has issued an order against Uniswap Labs for offering illegal digital asset derivatives trading
- Uniswap Labs has been fined $175,000 and ordered to cease operations that violate the Commodity Exchange Act
- The CFTC recognized Uniswap Labs’ cooperation, which resulted in a reduced penalty
The Commodity Futures Trading Commission (CFTC) has fined Uniswap Labs $175,000 for offering unregistered, illegal derivatives trading through its decentralized platform. The firm was found to have facilitated margined digital asset transactions that did not comply with the Commodity Exchange Act, resulting in a monetary penalty and an order to cease unregistered activities. Uniswap Labs cooperated with the CFTC’s investigation, which resulted in a reduced penalty.
Uniswap Fell Foul of 28-day Rule
The CFTC’s investigation found that Uniswap Labs enabled users to trade digital assets on margin, violating the Commodity Exchange Act (CEA). Specifically, the platform allowed leveraged and margined digital asset transactions that were not delivered within the required 28-day timeframe. This failure to meet legal requirements rendered these trades illegal under the CEA, which regulates commodity transactions to protect market integrity.
“Decentralized finance protocols must ensure that their platforms operate within the law,” said Ian McGinley, Director of Enforcement at the CFTC. McGinley emphasized that the CFTC will hold DeFi platforms accountable if they facilitate illegal trading activities.
Enforcement and Cooperation
The $175,000 fine imposed on Uniswap Labs also included an order to cease all unregistered activities in violation of the CEA, although the CFTC acknowledged that Uniswap Labs cooperated fully with the investigation, which played a significant role in reducing the financial penalty.
Uniswap was served with a Wells Notice by the Securities and Exchange Commission (SEC) in May, and it was revealed overnight that New York State Attorney General Letitia James has joined in the regulatory action by issuing subpoenas to venture capital firms that have invested in decentralized-finance giant Uniswap, including Andreessen Horowitz and Union Square Ventures.
