The regulator alleges that Uniswap Labs illegally facilitated digital asset leverage and margin transactions through a decentralized trading protocol. The company helped develop and use the blockchain-based protocol, allowing contract participants and large companies in the U.S. and abroad to trade digital goods using Ethereum, the CFTC said in its ruling.
To make the protocol easier to access, Uniswap Labs developed and maintained a dedicated interface through which users could trade hundreds of liquidity pools on the protocol. Among the digital assets traded on the protocol and through the interface were a number of leveraged tokens. The regulator called these tokens leveraged commodities, or margined commodities, that did not deliver within 28 days.
The CFTC says that such products should only be offered on trading venues registered with the agency to operate in the futures market, and Uniswap Labs is not registered with the CFTC. In addition to the $175,000 fine, the regulator also ordered Uniswap Labs to refrain from violating the Commodity Exchange Act (CEA).
“As the number of digital asset platforms grows and decentralized finance ecosystems mature, the CFTC will continue to enforce the Commodity Exchange Act. DeFi protocol operators must ensure that their transactions do not violate the law,” said Ian McGinley, head of the CFTC’s Division of Enforcement.
In May, decentralized exchange Uniswap urged another financial regulator, the U.S. Securities and Exchange Commission (SEC), not to prosecute it for trading UNI tokens. The SEC insists that the tokens are unregistered investment contracts.
Source: Bits
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