Uniswap faces mass lawsuits for “unregistered securities”

Earlier this week, a new class action lawsuit was filed against Uniswap alleging that it sold unregistered securities and did not disclose these risks to its users.

There are currently two lawsuits in the US, including VC A16z and Paradigm, which have been filed against DEX.

The first lawsuit, filed on April 4 by crypto investor Nessa Rixley (North Carolina), claims to have suffered “significant losses” as a result of investing $ 10,400 in low-cap digital assets such as EthereumMax, Matrix Samurai and Rocket. Bunny between May and July last year.

He claims that Uniswap did not carry out identity checks and did not impose securities restrictions on “fraudsters” who use a platform to list fraudulent digital tokens to conduct mass fraud. Risley is represented by Barton LLP and Kim & Serritella LLP.

Its founder Hayden Adams and supporters such as Andreessen Horowitz, Paradigm, Union Square Ventures and AH Capital Management also joined the lawsuit. Lawyers claim that the supporters helped and helped Uniswap “not register as a stockbroker or broker.”

Although they still have to certify the class, the goal is to attract more people who have invested and lost their money on Uniswape. He said the protocol did not disclose the risks associated with investing in securities.

Did Uniswap allow “carpet removal”?

The class action also claims that Uniswap allowed “carpet pulling” and “pumps and dumps” on its platform. It points to a decentralized stock exchange fee structure that pays liquidity providers for each trade as inciting fraud.

She said that this, together with the fact that Uniswap retained part of the developer’s fees, created a conflict of interest that made DEX a silent fraud broker.

The conclusion of the more than 60-page document is:

The defendants profited profusely from this illegal activity, as did the issuers to whom Uniswap paid hidden and exaggerated fees. In the meantime, unsuspecting users on the other side of these fraudulent transactions have remained in their hands.

Various reactions to the lawsuit have appeared on Twitter. On the one hand, there are those who believe that the lawsuit repeats what is evident about shitcoins on decentralized stock exchanges. However, some believe that the action is to some extent valid.

The SEC continues to focus on cryptophirms

In September last year, the US Securities and Exchange Commission (SEC) launched an investigation into Uniswap and examined how the platform is being used and sold.

In 2020, the SEC sued Ripple and its founders for selling XRP, which it called unregistered securities. The matter is currently in court with Ripple, where the stock market is arguing why XRP is a cryptocurrency and not a “security” according to Howie case.

In August 2021, the regulator also received DeFi developer Blockchain Credit Partners and its managers, who claimed that the two tokens they sold were “securities” and should have been registered.

In an interview with Blockchain Credit Partners, SEC Law Director Gurbir Grewal said:

Full and fair disclosure remains a cornerstone of our securities laws – no matter what technology is used to offer and sell those securities.

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