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Posted:
- Uniswap Labs to Pay $175,000 to CFTC for Allowing BTC and ETH Leverage
- The order has had little to no impact on UNI’s price at the time of writing
The Commodity Futures Trading Commission has issued an order against one of the leading DeFi protocols in the crypto space: Uniswap Labs. The enforcement agency slammed the cryptocurrency-focused platform for “illegally offering leveraged or margined commodity transactions in digital assets through a decentralized digital asset trading protocol.”
As a result, the CFTC imposed a $175,000 fine and ordered the platform to stop further violating the Commodity Exchange Act. Ian McGinley, Director of Enforcement, said,
“Today’s action further demonstrates that the Division of Enforcement will vigorously enforce the CEA as digital asset platforms and DeFi ecosystems evolve”
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Uniswap focused on offering commodities?
Regarding the violation, the order explains that Uniswap allowed users to trade cryptocurrencies such as Ether (ETH) and Bitcoin (BTC) for approximately 2:1 leverage. In this case, the agency again claimed that Ether (ETH) and Bitcoin (BTC) were both commodities and therefore fell under its department. The order continues said,
“Defendant violated Section 4(a) of the Act, 7 U.S.C. § 6(a) by offering (…) to do business anywhere in the United States, its territories, or possessions for the purpose of soliciting or accepting of orders for (…) customers who were not eligible contract participants or eligible commercial entities”
Interestingly, this announcement has had little to no effect on UNI’s price. According to CoinMarketCap, the coin was trading at $6.52 with a market cap of over $3 billion. The past hour chart showed a negative change of 1.07%, while the past day chart showed an uptrend of 7.25%.
Notably, this action comes months after the SEC announced its intention to take legal action against the platform via a Wells Notice. In its case, the enforcement agency claimed that the protocol was an unregistered stock exchange, while the interface and wallet functioned as unregistered brokers.
In response, the Labs submitted a forty-page response detailing all the reasons why the committee should not move forward with its plans. The DeFi platform claimed that it was not an exchange. It further added that the SEC had no jurisdiction to regulate Ether, BTC and stablecoins, the main coins traded on the platform.
And now that the CFTC has asserted its jurisdiction, it remains to be seen whether or not the SEC will bring any claims. MartyParty, a crypto commentator, spoke about the CFTC’s action: said on X,
“IMO: The wording is bullish and a change from hostile enforcement to rewarding ‘cooperation’ with light fines. This affected their Bitcoin and Ethereum tokens.”