A New York court has dismissed a proposed class action lawsuit against decentralized crypto exchange Uniswap, while classifying popular cryptocurrencies Ether (ETH) and Bitcoin (BTC) as commodities in a Wednesday filing. The suit, filed in April 2021, by a group of investors, alleged that Uniswap violated U.S. securities laws by failing to register as an exchange or broker-dealer, offering and soliciting securities on an unregistered exchange.
Judge Katherine Polk Failla of the Southern District of New York directly called ETH a commodity and declined to stretch the federal securities laws to cover the conduct alleged, in the case against Uniswap. The court’s opinion on its dismissal of the class action suit could influence future litigation against decentralized protocols and perhaps even those alleging violation of U.S. securities laws.
The decentralized nature of the Uniswap Protocol made identifying scam token issuers unknown and unknowable, leaving no identifiable defendant in the case, Judge Polk Failla said in the opinion following Wednesday’s order. The court also shot down the plaintiffs’ argument that Uniswap was like the manufacturer of a self-driving car and that the protocol and its creators caused harm by creating a system that allowed for scam tokens.
Citing an absence of relevant regulation, the court concluded that the investors’ concerns are better addressed to Congress than to this Court.