Judge dismisses class-action suit against Uniswap over token scam losses
The judge showed rare understanding of DeFi technology and stated the defendants would do better to address their complaints to Congress.
The United States District Court of Southern New York has dismissed a class-action suit against Uniswap Labs, its CEO, foundation and venture capital backers brought by plaintiffs who claimed they lost money due to scam tokens on the decentralized cryptocurrency exchange. Judge Katherine Polk Failla, who handed down the dismissal, is also hearing the Securities and Exchange Commission’s case against Coinbase.
The suit was brought by six individuals who bought tokens on Uniswap between December 2020 and March 2022. They argued on the behalf of a “nationwide class of users” that Uniswap Labs controlled liquidity pools on the protocol, including those created by the scammers they lost money too.
The suit was filed in April 2022. The defendants were demanding the recission of the (smart) contracts they entered into buy buying the scam tokens, with compensation, under the Securities Act of 1933 and Securities Exchange Act of 1934.
The plaintiffs argued that their claim was backed up by the fact that Uniswap held “liquidity provider funds and newly created tokens in Uniswap’s proprietary core contracts,” used routers it controlled to process transactions on the protocol and issued liquidity tokens when pools were created. In addition, the plaintiffs held that the defendants “likely” held at least 88% of Uniswap’s UNI (UNI) governance tokens, although they had no actual knowledge of token ownership.
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