- Uniswap Labs to pay $175,000 to CFTC for allowing the leverage trade of BTC and ETH
- The order has had little to no impact on the price of UNI, at press time
The Commodity Futures Trading Commission has issued an order against one of the leading DeFi protocols in the crypto-space – Uniswap Labs. The enforcement agency took a hit at the crypto-focused platform because it “illegally offered leveraged or margined retail commodity transactions in digital assets via a a decentralized digital asset trading protocol.”
As a result, the CFTC has imposed a penalty of $175,000 and ordered the platform to cease and desist from further violating the Commodity Exchange Act. Ian McGinley, the Director of Enforcement, said,
“Today’s action demonstrates once again the Division of Enforcement will vigorously enforce the CEA as digital asset platforms and DeFi ecosystems evolve”
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Uniswap targeted for listing commodities?
Relating to the violation, the order explains that Uniswap allowed users to trade on cryptocurrencies such as Ether (ETH) and Bitcoin (BTC) for approximately 2:1 leverage. In this case, the agency, once again, asserted that Ether (ETH) and Bitcoin (BTC) were both commodities, thereby falling under its department. The order further said,
“Respondent violated Section 4(a) of the Act, 7 U.S.C. § 6(a), by offering to enter into (…) business anywhere in the United States, its territories or possessions, for the purpose of soliciting or accepting orders for (…) customers who were not eligible contract participants or eligible commercial entities”
Interestingly, this announcement has had little to no effect on the price of UNI. According to CoinMarketCap, the coin was trading at $6.52 with a market cap of over $3 billion. The past hour chart showed a negative 1.07% change, whereas the past day chart showed a uptrend of 7.25%.
Notably, this action comes months after the SEC announced its intention of taking legal action against the platform via a Wells Notice. In its case, the enforcement agency claimed that the protocol was an unregistered securities exchange, while the interface and the wallet were functioning as unregistered brokers.
In response, the Labs filed a 40-page response on all the reasons the commission should not go ahead with its plans. The DeFi platform claimed that it was not an exchange. It further added that the SEC lacked jurisdiction to regulate Ether, BTC, and stablecoins, which were the primary coins traded on the platform.
And, now with CFTC asserting its jurisdiction, it remains to see whether or not the SEC would make any claims. Speaking on the CFTC’s action, MartyParty, a crypto commentator, said on X,
“IMO: Wording is bullish and a change from hostile enforcement to rewarding “cooperation” with light fines. This pertained to their Bitcoin and Ethereum leveraged tokens.”
