Appeals Court Upholds Dismissal of Uniswap Class Action Lawsuit

Second Circuit Court Upholds Dismissal of Uniswap Class Action, Rules Smart Contract Developers Not Liable for Platform Misuse

  • The Second Circuit Court upholds dismissal of class action lawsuit against Uniswap over scam tokens.
  • Court rules that smart contract developers cannot be held liable under Exchange Act for platform misuse.
  • Only state law claims from New York, North Carolina, and Idaho will be reheard in district court.
  • Decision follows SEC’s recent termination of its investigation into Uniswap’s operations.
  • Judge likened the case to holding payment apps responsible for illegal transactions.

The U.S. Court of Appeals for the Second Circuit has upheld a lower court’s decision to dismiss most claims in a class action lawsuit against Uniswap Labs, marking a significant victory for decentralized finance platforms.

- Advertisement -

The lawsuit, initiated in 2022 by investors against Uniswap Labs and its venture capital backers, claimed the company bore responsibility for losses incurred through scam tokens traded on its decentralized exchange protocol. Judge Katherine Polk Failla of the Southern District of New York initially dismissed the case in 2023.

In their ruling, the Second Circuit judges emphasized that it “defies logic” to hold smart contract developers liable for third-party misuse of their platform. This interpretation could set a precedent for future cases involving decentralized exchanges, which operate through automated market-making protocols rather than traditional intermediaries.

The plaintiffs appealed the dismissal in September 2023, but the appellate court maintained the rejection of claims under both the Securities Act and Exchange Act. The only surviving elements are state law claims from New York, North Carolina, and Idaho, which will return to district court for further consideration.

This legal victory comes at a particularly opportune time for Uniswap, following the U.S. Securities and Exchange Commission’s recent decision to conclude its investigation into the platform without taking enforcement action. The SEC had been examining whether Uniswap operated as an unregistered securities exchange and broker.

The case highlights the evolving legal landscape around decentralized finance platforms, with courts increasingly distinguishing between platform developers and those who misuse their technology for fraudulent purposes. Judge Failla’s analogy comparing the situation to holding Venmo or Zelle responsible for illegal transactions has resonated with higher courts, potentially influencing future regulatory approaches to decentralized finance.

✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.

Previous Articles:

- Advertisement -

Latest

American Engineer Drugged, Robbed in Sophisticated London Crypto Heist

An American software engineer lost approximately $123,000 in cryptocurrency after being drugged and robbed in London.The victim was targeted by an impersonator posing as...

Max Keiser Doubts New Bitcoin Treasuries’ Discipline in Bear Market

Bitcoin-focused companies are increasingly copying the treasury strategy used by Michael Saylor's Strategy.Max Keiser raised doubts about whether these newer companies can maintain commitment...

South Korea Election Puts Crypto Policy at Center of Debate

Nearly one-third of South Koreans hold digital assets, making crypto a vital issue in the upcoming presidential election.Both major parties support crypto exchange-traded funds...

Scottsdale Residents Lose $6M to Crypto Scams; Police Respond

Scottsdale residents have reported losing over $6 million to cryptocurrency Scams in 2024.Authorities say actual losses could be higher, as not all cases are...

Ethereum Bullish Patterns Signal Altseason, 55% Rally Possible

Ethereum is showing two bullish chart patterns against Bitcoin, indicating a possible 30–55% price increase. Crypto analysts say an ETH/BTC rally could spark a broad...

Must Read

Top 8 Books Every Beginner Should Read About Cryptocurrency

Cryptocurrency and blockchain technology are filled with technical terms that beginners find challenging to understand. One of the best ways to learn about cryptocurrency...