Uniswap faces lawsuit for the sale of unregistered securities and failing to disclose associated risks to the users so let’s find out more in today’s latest crypto news.
The Uniswap user Nessa Risley from North Carolina invested about $10,400 on the low-cap tokens like EthereumMax, MAtrix Samurai, and Rocket Bunny and the trader experienced major losses and sought justice thorugh legal action alone. Risley launched the legal proceedings and alleged that Uniswap failed to conduct the identity checks and to impose securities restrictions on Fraudsters that use the platform to scam other users by conducting rampant fraud.
The two US law firms filed a lawsuit against Uniswap and sued the DEX and its backers for violating the securities laws by offering and selling securities in the form of digital tokens. The lawsuit filed by Kim and Serritella LLP and Barton LLP aims to invite victims such as Risley who lost money since being on Uniswap to join a class action against the founders and the developers of the platform. It then claimed that Uniswap failed to disclose registration statements and the information regarding the risks of associated investments for the securities that they were selling to the users.
The class action states that Uniswap labs allowed unlawful activities to happen on the platform and one of the many accusations targeted the DEX fee structure which encourages fraud by paying liquidity providers a chunk for each trade. In the meantime, Uniswap collected fees for developers with the ability to keep a chunk of these fees for itself, and the conflicting interest involved to put Uniswap as a silent facilitator of scams.
The lawsuit is not the first to challenge the decentralzied principle of DEFI protocols and PoolTogether as we saw back in January was legally challenged by the software engineer named Joseph Kent who claimed that the protocol’s practice is a form of lottery banned under New York Law. Uniswap faces a lawsuit while last year we saw the SEC opening up an investigation against the provider while trying to find out how the exchange was utilized and operated. The SEC chairman Gary Gensler even outlined concerns over the DEFI protocols which he believed can be classified as the types of entities the Commission oversees.
DC Forecasts is a leader in many crypto news categories, striving for the highest journalistic standards and abiding by a strict set of editorial policies. If you are interested to offer your expertise or contribute to our news website, feel free to contact us at [email protected]