The Commodity Futures Trading Commission (CFTC) has taken action against Uniswap Labs, a New York-based company, for offering illegal digital asset derivatives trading. The CFTC has ordered Uniswap Labs to pay a $175,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act (CEA).
This enforcement action is part of the CFTC’s ongoing efforts to regulate the decentralized finance (DeFi) space, particularly regarding digital asset platforms. Director of Enforcement Ian McGinley emphasized the CFTC’s commitment to enforcing the CEA as digital asset platforms and DeFi ecosystems evolve.
Uniswap Labs developed and deployed a blockchain-based protocol that enabled users, including non-Eligible Contract Participants, to trade digital assets using the Ethereum blockchain. The protocol allowed users to create and trade with liquidity pools, which consisted of matched pairs of digital assets.
Uniswap Labs also developed and maintained a web interface for users to access the protocol and trade in hundreds of liquidity pools. Notably, the protocol offered leveraged tokens, providing users with leveraged exposure to digital assets like Ether and Bitcoin. The CFTC determined that these leveraged tokens constituted leveraged or margined commodity transactions that did not result in actual delivery within 28 days. As such, they could only be offered to non-Eligible Contract Participants on a designated or registered contract market, which Uniswap Labs was not.
