US Judge Rules that Uniswap Not Responsible for Third Parities' Bad Behaviors

US Judge Rules that Uniswap Not Responsible for Third Parities' Bad Behaviors on Protocol

Judge Katherine Polk Failla of the US District Court for the Southern District of New York dismissed a class action complaint against Uniswap and Paradigm alleging that Uniswap should be responsible for the losses caused by scam tokens on the protocol. The judge ruled that protocol developers cannot be held accountable for the losses of the users or the damage caused by third parties.

Uniswap compared the plaintiffs' point of view to "an effort to hold a developer of self-driving cars liable for a third party's use of the car to commit a traffic violation or to rob a bank". The judge found that there were no transactions between the plaintiffs and the Uniswap platform or Uniswap Labs, and the current securities laws do not reach the liability of the DeFi protocol itself for the actions of people using it to defraud others.

Following the ruling, Uniswap founder Hayden Adams said on X, "Huge win, long live DeFi. One longtime fear of mine has been bad legal interpretation of our complex, technical industry. It's highly motivating to see US courts hold up arguments I've felt deeply for years."

It's worth mentioning that Judge Katherine Polk Failla believed $ETH is a commodity instead of a security in her decision in the case. She is also in charge of the SEC against Coinbase case.

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