The Commodity Futures Trading Commission (CFTC) of the United States has charged Uniswap Labs, the developer of the decentralized exchange, with the illegal provision of leveraged cryptocurrency trading to domestic retail investors. This development was revealed in a recent announcement on September 4.
To resolve these charges, Uniswap Labs has consented to a settlement involving a civil penalty of $175,000 and an agreement to cease any activities that breach the Commodity Exchange Act (CEA). CFTC’s enforcement director, Ian McGinley, emphasized the commitment to stringently applying the CEA as the digital asset sector, including DeFi platforms, continues to evolve. He noted the importance of these platforms adhering to legal standards.
However, the enforcement action was met with criticism from within the CFTC itself. Commissioner Summer Mersinger expressed her disapproval, highlighting a preference for regulatory clarity and guidance over what she termed “regulation through enforcement.” She noted her disappointment that the commission has yet to establish clear rules for DeFi protocol compliance.
Furthermore, Commissioner Caroline Pham voiced concerns over the process, suggesting that establishing extensive interpretations through a settlement order rather than through proper rule-making might violate the Administrative Procedure Act (APA). She was particularly critical about the basis of the charges, which centered merely on the use of the term “leveraged” in the names of certain tokens.
The tokens in question, including the BTC 2x Flexible Leverage Index token (BTC2XFLI) and the ETH 2x Flexible Leverage Index token (ETH2XFLI), were identified in the CFTC’s order but not their issuer, presumed to be Index Coop. According to the CFTC, these tokens qualify as “leveraged or margined commodity transactions,” thus falling under its jurisdiction.
This regulatory scrutiny coincides with broader discussions on the classification of digital assets, with SEC Chair Gary Gensler asserting that most digital assets are securities under U.S. law. Earlier in April, the SEC accused Uniswap of operating an unregistered securities exchange, a claim Uniswap rebuffed by affirming its status as a software firm, not a securities exchange.
Uniswap remains a leading entity in the DeFi arena, hosting swaps across numerous blockchain platforms and boasting over $4.3 billion in total value locked as of the latest reports.
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