The Commodity Futures Trading Commission (CFTC) has announced an order against Universal Navigation Inc., operating as Uniswap Labs, for allegedly offering illegal leveraged or margined retail commodity transactions in digital assets through its decentralized trading protocol. The order, part of the CFTC’s enforcement focus in the decentralized finance (DeFi) sector, requires Uniswap Labs to pay a $175,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act (CEA).
Ian McGinley, the CFTC’s Director of Enforcement, emphasized the importance of compliance in the evolving digital asset and DeFi sectors: “DeFi operators must be vigilant to ensure that transactions comply with the law.”
Case Background
Uniswap Labs, a Delaware company based in New York, developed a blockchain-based digital asset protocol that enabled users in the U.S. and abroad to trade digital assets on the Ethereum blockchain. This protocol allowed the creation and trading of liquidity pools consisting of matched pairs of digital assets. The platform offered leveraged tokens that provided exposure to assets such as Ether and Bitcoin.
The CFTC found that these leveraged tokens qualified as retail commodity transactions but did not meet the delivery requirements within 28 days, making them unlawful for non-Eligible Contract Participants without registration as a contract market. As Uniswap Labs was not registered, these activities were found to be in violation of the CEA.
The CFTC acknowledged Uniswap Labs’ substantial cooperation with the investigation, resulting in a reduced civil penalty. The enforcement team responsible for this matter included Devin Cain, K. Brent Tomer, Lenel Hickson, Jr., and Manal M. Sultan.
$UNI, the native token of the platform, is up 3% in the last 24 hours.
