Uniswap Labs Faces $175K Penalty for Leveraged Crypto Trades

The U.S. Commodity Futures Trading Commission (CFTC) has fined Uniswap Labs $175,000 for unlawfully offering leveraged and margined retail commodity transactions in digital assets.

It marks the latest regulatory crackdown on the decentralized finance (DeFi) sector.

Key Details of the Case

In a September 4 statement addressing the matter, the agency said Uniswap facilitated illegal transactions through its decentralized trading protocol, which let users trade digital assets, including leveraged tokens.

The CFTC pointed out that those transactions did not meet regulatory requirements. It also stated that the offending platform had been offering the said transactions without the proper designation as a contract market, in violation of the Commodity Exchange Act (CEA).

In addition to paying the fine, Uniswap Labs has also agreed to stop the activities deemed unlawful. It will also refrain from any more violations of the CEA. The Commission said the financial penalty it imposed on the crypto company was low, mostly because the platform cooperated with its investigation.

Broader Regulatory Actions

This is not the first time Uniswap has been on the wrong end of the gaze of U.S. authorities. In April 2024, the Securities and Exchange Commission (SEC) sent the crypto company a Wells Notice, accusing it of operating as an unregistered securities broker and exchange.

More recently, reports have emerged that New York Attorney General (NYAG) Letitia James has joined regulatory efforts around the platform. According to CoinDesk, her office has issued subpoenas to Uniswap’s venture capital investors, including Andreessen Horowitz (a16z) and Union Square Ventures, as part of an ongoing investigation into the company.

This latest push mirrors previous actions the NYAG has taken against several crypto firms, including KuCoin, Genesis, and Gemini.

The Gemini case is ongoing, with James having accused the firm of misleading investors about the risks associated with its Earn program, run in partnership with Genesis.

Additionally, the NYAG filed a lawsuit against Genesis, its parent company, Digital Currency Group, and its CEO, Barry Silbert, for allegedly concealing a $1.1 billion loss from investors. That matter concluded with a $2 billion settlement agreement between the parties.

In KuCoin’s case, James secured an agreement requiring the crypto exchange to refund more than $16.7 million to its New York customers, numbering 150,000.