Just when there seemed to be no more room for trouble, the Commodity Futures Trading Commission (CFTC) has slapped Uniswap with a fine. The DeFi protocol is accused of violating the Commodity Trading Act (CEA) by trading leveraged or margined tokens. According to the agency, the firm requires a license to operate with certain tokens.
This enforcement measure found dissenting voices within the agency itself. In this regard, Commissioner Summer K. Mersinger criticized the measure and described it as an attack on innovation. She also denounced that the CFTC’s actions constitute a dispute to take control over the regulation of DeFi before the SEC.
CFTC fines Uniswap, actions against other protocols expected
The fine that Universal Navigation, the firm that operates under the name Uniswap, must pay is $175,000. It is important to note that the Uniswap protocol allows users to directly trade digital assets without intermediaries. Hence, these types of platforms are known as decentralized exchanges (DEX).
Among the tokens it trades are leveraged ones. The CFTC’s legal action against the DeFi application was focused on trading in the latter.
According to the CFTC, the token swaps in question were leveraged or margined commodity transactions. These can only be offered to ineligible contract participants on a trading board. Such a board must be designated or registered by the CFTC as a contract exchange. This is not the case with Uniswap, the government agency stresses.
Uniswap’s chief legal officer Katherine Minarik, meanwhile, stressed that the case was a minor legal issue, given that it involved a limited number of tokens. She also noted that the settlement does not imply any admission or denial of the regulator’s findings. “We remain singularly focused on building the future of DeFi for all and taking on the fights necessary to make that happen,” she stressed.
Today Uniswap Labs resolved a CFTC matter, about a fraction of a percent of trading through our interface of a handful of tokens, for a $175k fine in a standard no admit-no deny settlement. We are glad to put this to rest and stay focused on building the future of DeFi for all.
—Katherine Minarik (@MinarikLaw) September 4, 2024
Commissioner criticizes regulators’ decision
As mentioned, Commissioner Mersinger took it upon herself to make public her dissent regarding this agency decision. She referred to one of the points of the measure, which suggests that the fine should be paid for the time that the protocol operated the aforementioned leveraged tokens on its platform until it stopped trading.
Meanwhile, other DeFi protocols that voluntarily comply with the law will also be fined, although with greater considerations. On this, Mersinger highlights that the CFTC punishes Uniswap and other protocols that wish to comply with the laws. In his opinion, this is a negative precedent that undermines innovation in the United States.
On the other hand, the commissioner stated that the actions against the DEX are a form of competition between the CFTC and the SEC (Securities and Exchange Commission). Both agencies claim the right to govern the destinies of the Cryptocurrency world and sue various types of companies with different charges that adapt to their views on what cryptocurrencies are and how they should be operated.
In fact, earlier this year the SEC sent Uniswap a Wells Notice, which precedes a lawsuit. The SEC’s argument is that the DEX trades securities illegally and, in doing so, violates securities laws.
UNI token reacts positively to CFTC fine against Uniswap. Source: CoinMarketCap
UNI token with positive performance
Far from discouraging investors, the news of the lawsuit triggered a positive reaction in the price of the UNI token. According to data from CoinMarketCap, UNI’s performance is +5.47% in the last 24 hours.
It is possible that this $175,000 fine imposed by the CFTC on Uniswap and the protocol’s decision to stop trading leveraged tokens are the end of its non-compliance problem. Simply put, the feeling among investors is that the firm got off on the cheap. With this, it seems logical that the price of its UNI coin is heading towards the green.
Do you want to always be up to date with the world of cryptocurrencies? Subscribe now to CriptoTendencia’s WhatsApp channel! Here you will instantly receive the most relevant information about Bitcoin, Altcoins, DeFi, NFTs, Blockchain and the Metaverse.
Related
Crypto Keynote USA
For the Latest Crypto News, Follow ©KeynoteUSA on Twitter Or Google News.
