The Commodity Futures Trading Commission (CFTC) is filing charges against the company behind Uniswap (UNI) for offering illegal crypto derivatives contracts.
In a new press release, the regulator says it has imposed a civil penalty of $175,000 and a cease and desist order on Uniswap Labs after finding it violated the Commodity Exchange Act (CEA).
According to the regulator, Uniswap Labs never properly registered as a contract marketplace, but operated as if it did.
“Among the digital assets traded through the protocol and interface were a limited number of leveraged tokens, which gave users leverage on digital assets such as Ether and Bitcoin.
The order shows that these leveraged tokens are leveraged or margin commodity transactions that have not resulted in actual delivery within 28 days and therefore can only be offered to non-eligible contract participants on a trading venue designated or registered by the CFTC as a contract market , which Uniswap Labs was not.”
Because Uniswap Labs cooperated with the CFTC’s investigation, it received a reduced fine, according to the press release.
As Ian McGinley, director of enforcement at the CFTC, says:
“Today’s action further demonstrates that the Division of Enforcement will vigorously enforce the CEA as digital asset platforms and DeFi ecosystems evolve. DeFi operators must be vigilant to ensure transactions comply with the law.”
Earlier this year, the US Securities and Exchange Commission (SEC) also sent a Wells Notice – a notice that the regulator plans to take enforcement action – against the company.
Uniswap is trading at $6.36 at the time of writing, up 5% over the past 24 hours.
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