North Carolina Uniswap user Nessa Risley invested about $ 10,400 in low-cap digital tokens such as EthereumMax, Matrix Samurai, and Rocket Bunny from May to July last year. Since then, traders have experienced “substantial losses” and have therefore sought justice through legal action.
On April 4, Lisley imposes securities restrictions on “scammers” who list digital tokens like fraud for Uniswap’s failure to perform identity verification and use the platform to carry out rampant fraud. The proceedings began, claiming that they could not.
Uniswap accused of selling unregistered securities
Two U.S. law firms have filed proceedings against Uniswap, decentralized exchanges and their backers (including well-known VC firms such as A16z and Paradigm) to “provide and sell securities in the form of digital tokens. It violated the securities law by doing so. “
The proceedings filed by Kim & Serritella LLP and Barton LLP aim to invite victims like Risley, who lost money in Uniswap since April last year, to a class action proceeding against the platform’s founders and developers. Uniswap alleged that it did not disclose a “registration notice” containing information on investment risks related to securities sold to users.
In addition, a class action lawsuit states that Uniswap Labs allow illegal activities such as “pump and dump” and “rug pull” on the platform. One of the main accusations targets the DEX fee structure, which states that it encourages fraud by paying a portion of the fees for each transaction to a liquidity provider.
Uniswap, on the other hand, can collect fees for developers and keep some of those fees for themselves. Due to the conflict of interest involved, Uniswap can become a silent facilitator of fraud.
SEC looking at Uniswap
The above proceedings are not the first to challenge the decentralized principles of the DeFi protocol. In January, Pool Together, a gamed cryptocurrency saving protocol, was legally challenged by a software engineer named Joseph Kent. He argued that the practice of the protocol was essentially a type of lottery prohibited by New York law.
Last September, the U.S. Securities and Exchange Commission’s top executives were trying to determine how clients were using the exchange, how it was sold, and how it was generally operated. Therefore, the SEC has begun investigating the Uniswap Lab. Earlier, SEC Chairman Gary Gensler outlined concerns about the DeFi protocol, which he believed could be classified as a type of entity overseen by the Commission.
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