As the crypto industry weathers what advocates say are oceans of regulatory uncertainty in the United States, a district judge’s ruling earlier this week dove into decentralized finance (DeFi), and may have calmed the waters for protocols like Uniswap.

Tossing out a class action lawsuit on Wednesday, Southern District of New York Judge Katherine Polk Failla found that Uniswap’s investors and developers were not liable under federal securities laws for so-called scam tokens that burned a trader.

In the decision, she parsed how the permissionless nature of projects powered by automated smart contracts creates situations where decentralized exchanges should be viewed differently from centralized ones, such as Kraken or Coinbase.

In the case of Uniswap, it was the respective issuers of such tokens that wrote the code to create them and make them tradable via liquidity pools. Because of that, it’s a group of pseudonymous developers who are actually at fault, Failla said—not Uniswap Labs. 

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Author: André Beganski

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