DeFi: Uniswap, regulatory UFO, escapes the worst

It’s not not to justice to define the regulations applicable to the crypto and the decentralized financerecalls a magistrate as part of a complaint aimed at Uniswap.

The developers of the DeFi protocol Uniswap can they be held responsible for scams disseminated through it? A American judgeKatherine Polk Failla – also in charge of the case between Coinbase and the SEC – ruled that not.

The decentralized exchange was targeted by a complaint into a class action. For plaintiffs, Uniswapits founder Hayden Adams, and its main investors, Andreessen Horowitz and Paradigm, are responsible for the “ rampant fraud “on the DEX.

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Uniswap not responsible for scams

The complaint also sought to compel Uniswap to register with the regulatory authority for the financial industry, placing the DeFi player under the supervision of existing US regulations.

But for the magistrate, the complaint is “devoid of any factual basis”. Above all, because of the way it operates, based on decentralization and automation, the DEX and its creators cannot be held responsible.

Due to the decentralized nature of the protocol, the identity of the issuers of scam tokens is fundamentally unknown and unknowable, leaving plaintiffs with an identifiable injury but no identifiable defendant,” the judge found.

Congress to write DeFi regulation

The plaintiffs were not unaware of this. Indeed, in the court’s view, they brought this action “in the hope that this Court might ignore the fact that the current state of regulation of the crypto leaves them without recourse”.

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Nevertheless, writing law is not a matter for the court, but for the Congresssaid the magistrate. Moreover, Uniswap cannot be held responsible for the damage suffered under the current regulations.

For proponents of regulation and its reinforcement, the case will not fail to illustrate the existence of a legal vacuum. In this field, the DeFi is yet another UFO, which in Europe falls outside the scope of MiCA.

The thorny issue of the DeFi framework

The Court considers that smart contracts were themselves capable of being legally executed, as in the case of the ETH and BTC cryptocurrency exchange,” notes Judge Failla in his ruling.

For Uniswap’s General Counsel, Marvin Ammori, this ruling is synonymous with victory.

The Uniswap protocol is mainly used legally, and the protocol’s designers are not responsible when others misuse it,” se delighted on X.

The legal framework applicable to decentralized finance remains largely unwritten. At FranceThe AMF has begun to reflect on this issue, and has come up with some initial ideas.

The AMF supports a coordinated regulatory approach to ensure a global level playing field. It favors a “progressive and proportionate approach”, respecting the principle of “same business, same risk, same regulation”.

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