Uniswap Labs faces $175,000 fine for crypto-leveraging trades

The U.S. Commodity Futures Trading Commission (CFTC) has fined Uniswap Labs $175,000 for illegally offering leveraged and margined retail commodity transactions in digital assets.

It marks the latest regulatory crackdown on the decentralized finance (DeFi) sector.

Key details of the case

In a September 4 statement on the matter, the agency said Uniswap facilitated illegal transactions through its decentralized trading protocol, which allowed users to trade digital assets, including leveraged tokens.

The CFTC noted that these transactions did not meet regulatory requirements. It also claimed that the offending platform had been offering the said transactions without proper designation as a contract market, in violation of the Commodity Exchange Act (CEA).

In addition to paying the fine, Uniswap Labs has also agreed to stop activities deemed illegal. You will also refrain from any other violation of the CEA. The Commission said the financial penalty it imposed on the crypto company was low, especially since the platform cooperated with its investigation.

Broader regulatory actions

It’s not the first time that Uniswap has found itself on the wrong side of the US authorities’ gaze. In April 2024, the Securities and Exchange Commission (SEC) sent the crypto company a Wells notice, accusing it of operating as an unregistered broker and stock exchange.

More recently, reports have emerged that New York Attorney General (NYAG) Letitia James has joined regulatory efforts around the platform. According to CoinDesk, his office has issued subpoenas to Uniswap’s venture capital investors, including Andreessen Horowitz (a16z) and Union Square Ventures, as part of an ongoing investigation into the company.

This latest push mirrors previous actions the NYAG has taken against several crypto companies, including KuCoin, Genesis and Gemini.

The Gemini case continues, as James has accused the company of misleading investors about the risks associated with its Earn program, run in partnership with Genesis.

Additionally, the NYAG filed a lawsuit against Genesis, its parent company, Digital Currency Group, and its CEO, Barry Silbert, for allegedly concealing a $1.1 billion loss from investors. This matter was concluded with a $2 billion settlement agreement between the parties.

In KuCoin’s case, James secured a settlement that required the cryptocurrency exchange to refund more than $16.7 million to its 150,000 New York customers.

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