Led by Nessa Risli, a group of US investors filed a class-action lawsuit against Uniswap Labs. They accused the developer of violating securities laws, resulting in losses, The Block.
In addition to the company, the plaintiffs also named its founder Hayden Adams and investors in the Paradigm project, AH Capital Management, Andreessen Horowitz, and Union Square Ventures.
They accused them of unwillingness to close gaps in Uniswap’s operations for profit. According to the plaintiffs, the amount of fees collected by the protocol to date has surpassed $1 billion.
Investors said that fraudsters exploited the lack of KYC procedures and the defendant’s registration as a broker-dealer with the SEC to implement the Pump & Dump scheme. Uniswap Labs did not take adequate steps to prevent such practices.
The filing states that tokens traded on the DEX are unregistered securities. If properly disclosed in accordance with the law, investors could have refrained from purchasing assets backed by the fraudsters.
The group expects that Uniswap will acknowledge securities-law violations and compensate the damages awarded in court.
Uniswap Labs intends to challenge the allegations in court.
The argument is unfounded, and the complaint is rife with factual inaccuracies, our representatives said.
In August 2021, SEC Chair Gary Gensler warned about tighter regulation of DeFi and stressed that the decentralized nature of projects does not provide immunity from regulator oversight.
In September he called DeFi platform users ‘vulnerable’. Gensler stated that this segment ‘is rife with fraud, scams and abuses’.
Subsequently, media reports surfaced about the SEC’s investigation into several companies in the sector, including Uniswap Labs.
In January 2022, Gensler said that building regulatory frameworks for cryptocurrency exchanges would be a priority for the year.
In February, SEC enforcement chief Gurbir Grewal warned that the Commission would not offer amnesty to crypto companies that voluntarily disclose violations of securities laws.
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