The US Commodity Futures Trading Commission (CFTC) has reached an agreement with Uniswap, a decentralized trading platform, to settle allegations.
As part of the settlement, Uniswap is obligated to pay $175,000. Nevertheless, two CFTC Commissioners have voiced apprehensions over the case, contending that it exemplifies “regulation by enforcement” rather than a just regulatory procedure.
Uniswap faced allegations of engaging in unlawful practices by providing leveraged or margined retail commodity trades using digital assets. Commissioner Summer K. Mersinger and Commissioner Caroline Pham contend that the case should not have been taken to court, casting doubt on the CFTC’s justification for the allegations.
Commissioner Mersinger expressed disapproval of the settlement, considering it to be a concerning pattern of regulation in the cryptocurrency industry that is primarily driven by enforcement.
Mersinger also pointed out that the settlement relies on legal ideas that have not been thoroughly examined in a court of law. She contends that this methodology has the potential to impede innovation by compelling decentralized finance (DeFi) to relocate from the United States.
Commissioner Pham also expressed disagreement, raising doubts about the CFTC’s justification for the accusations. Pham highlighted the absence of any evidence that Uniswap had ever promoted or provided leveraged tokens, which is a crucial element of the CFTC’s argument.
Both commissioners have previously voiced apprehensions over the CFTC’s approach to managing digital assets and the agency’s criteria for selecting cases to prosecute.
Uniswap’s reaction to regulators comes after enduring many months of regulatory scrutiny, which included receiving a Wells notice from the SEC in early 2023.
Uniswap stated in its statement that the SEC lacks jurisdiction over Bitcoin, Ether, and stablecoins, which are the main assets exchanged on its platform. Although the CFTC has settled, the SEC has not yet initiated legal action against Uniswap.
