Uniswap’s $175,000 CFTC Fine Explained

The Commodities Futures Trading Commission (CFTC) issued an order against Uniswap on Wednesday, imposing a $175,000 settlement fee.

The regulator acknowledged Uniswap Labs’ cooperation with the Division of Enforcement’s investigation, resulting in a reduced civil monetary penalty.

Uniswap to Pay $175,000 in CFTC Case

The CFTC issued an order and settled charges against Universal Navigation Inc., operating as Uniswap Labs, requiring the company to pay a $175,000 fine. The charges stem from illegally offering leveraged or margined retail commodity transactions in digital assets through its decentralized trading protocol.

In addition to the civil penalty, the CFTC warned Uniswap Labs against future violations of the Commodity Exchange Act (CEA). The commission criticized Uniswap for failing to register as a designated contract market, which prohibited the DEX from offering leveraged trading products.

Despite lacking proper registration, Uniswap created a user interface and smart contracts that allowed users to trade tokens. Third parties also developed some of these tokens, exposing investors to leveraged or margined returns linked to the price of Bitcoin (BTC) and Ethereum (ETH).

“The order finds these leveraged tokens are leveraged or margined commodity transactions that did not result in actual delivery within 28 days and therefore can be offered to non-Eligible Contract Participants only on a board of trade that has been designated or registered by the CFTC as a contract market, which Uniswap Labs was not,” an excerpt in the press release read.

Read more: How Does Regulation Impact Crypto Marketing? A Complete Guide

Notably, the CFTC reduced the penalty, acknowledging Uniswap Labs’ cooperation during the investigation. According to Artemis data, Uniswap generates millions in fees daily, making the $175,000 fine a mere slap on the wrist.

 “IMO: Wording is bullish and a change from hostile enforcement to rewarding “cooperation” with light fines,” crypto commentator MartyParty wrote.

Meanwhile, Uniswap is also facing scrutiny from the US Securities and Exchange Commission (SEC). In April, the SEC issued a Wells Notice to Uniswap, indicating it had enough evidence to proceed with a lawsuit.

Read more: How To Buy Uniswap (UNI) and Everything You Need To Know

Amidst the latest development, the Uniswap (UNI) token is up 8%. BeInCrypto data shows that it is trading for $6.58 at the time of writing.