Uniswap Labs, a leading decentralized finance (DeFi) platform based in New York and registered in Delaware, has been charged by the Commodity Futures Trading Commission (CFTC) for illegally offering leveraged or margined retail commodity transactions in digital assets.
According to the CFTC, these transactions were conducted through a decentralized trading protocol, violating the Commodity Exchange Act (CEA).
How did Uniswap Lab leverage tokens?
Leveraged tokens are digital assets that provide exposure to the underlying assets like Ether and Bitcoin, which magnify returns, typically by 2-3 times.
Uniswap Labs developed and managed a blockchain protocol on the Ethereum blockchain that allowed users to trade digital assets through the liquidity pools that included the leveraged tokens.
The Penalty
The CFTC has ordered Uniswap Labs to pay a $175,000 civil monetary charge and cease and desist from violating the Commodity Exchange Act (CEA). Since Uniswap Labs was complying with the investigation protocol, the penalty amount was reduced.
CFTC Alert
“Today’s action demonstrates our commitment to enforcing the CEA as digital asset platforms and DeFi ecosystems evolve,” said Director of Enforcement Ian McGinley. “DeFi operators must ensure transactions comply with the law.”
After the incident, the CFTC urged the public to verify the company’s registration before investing and asked the public to report suspicious activities or violations of commodity trading law.
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