CFTC Charges Uniswap Labs with Illegal Crypto Derivatives Trading and Imposes $175,000 Penalty

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The US Commodity Futures Trading Commission (CFTC) has issued an order against Uniswap Labs for allegedly illegally offering token-equivalent crypto derivatives with leveraged positions.

According to a CFTC statement, the exchange was fined $175,000 and ordered to cease and desist from violating the Commodity Exchange Act.

The US regulator said Uniswap Labs has developed and implemented a blockchain-based digital asset protocol that allows users to trade digital asset liquidity pools. The company’s web interface allowed access to hundreds of these pools, including leveraged tokens that provide exposure to crypto such as Ethereum (ETH) and Bitcoin (BTC).

The CFTC found these leveraged tokens to be commodity trades that did not result in actual delivery within 28 days. Such offers to ineligible contract participants are permitted only on contract markets registered with the CFTC, which Uniswap Labs was not, the statement added.

“Today’s action demonstrates once again that the Division of Law 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,” said Ian McGinley, director of enforcement at the CFTC.

The CFTC acknowledged Uniswap Labs’ cooperation during the investigation, resulting in a reduced civil monetary penalty.

Regulatory pressure in 2024

In April of this year, Uniswap Labs received a Wells Notice from the US Securities and Exchange Commission (SEC). The regulator has threatened enforcement action against the entity behind the decentralized exchange, accusing it of offering unregistered securities.

On this occasion, Hayden Adams, CEO of Uniswap Labs, expressed confidence that their operations are compliant with regulations and that their work “is on the right side of history.”

Furthermore, he accused the SEC of letting “bad actors like FTX” pass while targeting the good actors, namely Uniswap and Coinbase.

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