Uniswap Set to Pay $175,000 to Settle US CFTC Charges

The US Commodities Futures Trading Commission charged and settled a case with Uniswap Labs, the developer behind the decentralized exchange Uniswap. As posted on the futures market regulator’s website, the Wednesday lawsuit accused Uniswap of illegally offering leveraged or margined products to retail traders.

The CFTC asked Uniswap Labs to pay a civil monetary fine of  $175,000 and desist from violating the Commodities Exchange Act (CEA).

“Today’s action demonstrates once again the Division of Enforcement 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,” US CFTC’s Director of Enforcement Ian McGinley said.

Uniswap Illegality Allows Leveraged Trading

Per the lawsuit, the US CFTC noted that Uniswap had allowed leveraged or margined trading on its platform without due registration. The regulator stated that the DeFi protocol developed and deployed contracts on the Ethereum network that allowed users to trade Bitcoin and Ethereum.

The CFTC also noted that Uniswap designed an interface allowing users to access these leveraged trading services. This product can only be offered to non-eligible contract participants in a market registered with the regulator.

According to the futures market regulator, Uniswap was fined minimally because it collaborated with investigations from the Division of Enforcement. A deviation from such cooperation would have attracted a bigger fine from the CFTC.

This is the second recent case Uniswap has had with a market regulator. In April, the decentralized exchange disclosed that the Securities and Exchange Commission (SEC) had issued a Wells notice to it. The news sparked a downward spiral for Uniswap’s native token, UNI, which fell over 20%.

Notably, UNI was almost unaffected by the CFTC charge. Following the news, the asset dropped to 3.8% but regained quickly to continue its uptrend. At the time of writing, UNI was up almost 7% in the past 24 hours and traded at $6.47.