Uniswap Wins Full Dismissal As SDNY Rejects Claims Over Scam Tokens Lawsuit

TLDR

• SDNY dismissed the second amended complaint with prejudice in the Uniswap scam token case.
• Judge Katherine Polk Failla found no plausible claim of Uniswap’s actual knowledge of fraud.
• The ruling cleared Uniswap Labs, Hayden Adams, the Uniswap Foundation, and VC backers.
• UNI rose about 6% on the day and traded near $3.97 at the time cited.

Uniswap has won a full dismissal in a class action tied to scam tokens traded through its protocol. The decision ends a case that started in 2022 and focused on liability for third-party token issuers.

A federal judge in New York ruled that the plaintiffs did not plead facts that could make Uniswap responsible for alleged fraud by unknown token creators.

Uniswap gets full dismissal with prejudice

Uniswap secured a complete dismissal in a class action over scam tokens. The case accused the platform of enabling fraudulent trades through smart contracts.

On Monday, Judge Katherine Polk Failla of the US District Court for the Southern District of New York dismissed the suit. The court dismissed the second amended complaint with prejudice.

Case began in 2022 and challenged fee-based trading

The lawsuit was filed in April 2022 by investors who reported losses. They said anonymous scam tokens were traded through the Uniswap protocol.

The plaintiffs claimed Uniswap acted as an unregistered securities exchange and broker-dealer. They also said the company earned revenue from liquidity fees linked to the trading activity.

Court rejects key theories and points to pleading failures

Judge Failla had already dismissed earlier claims in August 2023. The newer filing did not change the outcome, and the court found the updated claims still lacked support.

The ruling said the plaintiffs did not plausibly allege Uniswap had actual knowledge of fraud. The court also rejected claims tied to state consumer laws and unjust enrichment.

Decision compares DeFi protocol code to neutral tools

The court compared decentralized protocol code to peer-to-peer technology that can be misused. The ruling treated the alleged wrongdoing as actions by third-party users.

The judge’s reasoning placed responsibility on the token issuers who created the scam assets. It did not place liability on developers for how strangers used open source code.

Parties cleared and market reaction follows ruling

The dismissal cleared Uniswap Labs, its chief executive Hayden Adams, and the Uniswap Foundation. It also cleared three venture capital backers named in the lawsuit.

After the dismissal, Adams wrote on X that the ruling sets a legal marker for open source code. He said liability should rest with scammers, not protocol developers.

UNI, Uniswap’s native token, rose about 6% on the day mentioned. It traded near $3.97 at the time cited, while Bitcoin hovered near $69,000.

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