CFTC Fines Uniswap Labs $175,000 For Illegal Digital Asset Derivatives Trading

The Commodity Futures Trading Commission (CFTC) has issued an order against Uniswap Labs UNI/USD, settling charges related to illegal offerings of digital asset derivatives trading.

The agency fined the Delaware-based company, operating out of New York, $175,000. Uniswap also received a cease-and-desist note for violating the Commodity Exchange Act (CEA).

The CFTC’s action focuses on Uniswap Labs’ role in developing and deploying a blockchain-based digital asset protocol that allowed users, including non-Eligible Contract Participants, to trade in leveraged tokens.

These tokens, providing leveraged exposure to assets like Ether ETH/USD and Bitcoin BTC/USD, were deemed to be leveraged or margined commodity transactions that did not meet the CFTC’s regulatory requirements.

At the heart of the issue is Uniswap Labs’ web interface. It facilitated access to hundreds of liquidity pools on the protocol.

Also Read: NFT Market In Crisis – 96% Of Digital Tokens Declared ‘Dead’ As Investor Losses Mount

The CFTC found that the offering of these leveraged tokens to retail investors without proper registration as a contract market violated federal regulations.

This enforcement action comes in the wake of earlier regulatory scrutiny.

Earlier this year, Uniswap received a Wells notice from the Securities and Exchange Commission, signaling potential further regulatory action.

The company has not yet publicly responded to this latest CFTC order.

The CFTC’s decision to impose a relatively modest fine of $175,000 reflects Uniswap Labs’ “substantial cooperation” with the investigation, according to the order.

As the digital asset industry continues to grapple with regulatory challenges, many are looking ahead to Benzinga’s Future of Digital Assets event on Nov. 19.

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