TL;DR
- The CFTC has imposed a $175,000 fine on Uniswap Labs for allegedly offering digital asset derivatives illegally.
- According to the investigation, the protocol facilitated leveraged digital asset trading that violated physical delivery regulations under the Commodity Exchange Act (CEA).
- Despite the fine and cease-and-desist order, UNI token has risen 5% to $6.41, showing resilience in the market.
The Commodity Futures Trading Commission (CFTC) has issued an order against Uniswap Labs for allegedly offering digital asset derivatives illegally. The order, issued on September 4, 2024, falls within the CFTC’s ongoing enforcement actions against decentralized exchanges.
According to the statement, the CFTC determined that Uniswap Labs, the company behind the well-known decentralized protocol, facilitated digital asset trading using leverage or margin, violating the Commodity Exchange Act (CEA). The commission has imposed a $175,000 civil monetary penalty on the platform and has ordered the company to cease and desist from these practices.
Uniswap’s protocol allows users to trade digital assets through a blockchain-based liquidity network, utilizing the Ethereum blockchain. The investigation revealed that the protocol offered leveraged tokens that provided increased exposure to assets such as Bitcoin and Ethereum.
Uniswap Faces Disproportionate Crackdown
According to the commission, these tokens, by not resulting in physical delivery within 28 days, violate regulations that require such transactions to occur on designated or registered contract markets by the CFTC.
The CFTC acknowledged Uniswap Labs’ cooperation during the investigation, which led to a reduction in the imposed fine. However, the cease-and-desist order shows that the ultimate goal is to halt the protocol. The crypto industry faces again the authorities’ inability to establish competent regulations. The SEC has intensified its always unjustified crackdown on various crypto platforms and entities.
Regarding the market reaction, since the announcement of the fine, Uniswap’s UNI token has shown a slight increase in value, rising 5% to reach $6.41. Despite the impact of punitive regulatory measures, the community has responded positively and has supported the protocol.
