A four-year legal battle over alleged scam tokens traded on Uniswap’s protocol has come to a close after a federal court rejected the remaining claims against the decentralised exchange developer and its founder.
On Monday, Judge Katherine Polk Failla of the US District Court for the Southern District of New York dismissed the second amended complaint against Uniswap Labs and Hayden Adams with prejudice, barring the plaintiffs from refiling the case.
The ruling ends a class action first filed in April 2022 by a group led by Nessa Risley, which had sought to hold the company and several venture backers, including Paradigm, Andreessen Horowitz and Union Square Ventures, responsible for losses tied to alleged rug pulls and pump and dump schemes.
In her opinion, Failla concluded that the plaintiffs failed to plausibly allege that Uniswap had actual knowledge of the alleged fraud or that it substantially assisted in carrying it out.
Creating a venue where tokens can be traded, she wrote, is not the same as affirmatively helping perpetrate fraud.
The claims, she said, ultimately rested on the theory that Uniswap provided “ordinary services that anyone could use for lawful purposes,” even if some actors chose to use them unlawfully.
“Such an argument fails for the same reasons why a bank does not substantially assist a money launderer who washes his cash through the bank’s accounts, and why WhatsApp does not substantially assist a drug dealer who coordinates a sale on its messaging service,” she wrote.
Simply hosting the infrastructure on which misconduct occurs does not amount to legal responsibility for that misconduct, she reasoned.
Uniswap is not responsible for third-party actions
The lawsuit has already faced setbacks. In 2023, Failla dismissed claims, finding that key allegations lacked factual support.
The decision was later upheld by the US Court of Appeals for the Second Circuit, which returned the remaining state law claims to the district court for further review.
The plaintiffs then amended their complaint in May, narrowing their focus to alleged violations of state consumer protection laws and arguing that Uniswap allowed fraudulent token schemes to flourish on its platform.
The inability to pinpoint identifiable token issuers, she noted in earlier rulings, left the plaintiffs alleging injury without tying it to a concrete, culpable actor.
With the dismissal now entered with prejudice, the case reaches its final chapter.
Uniswap executives framed the decision as significant for the broader decentralised finance sector.
General Counsel and Head of Policy Brian Nistler described it as another precedent-setting ruling that rejects attempts to impose liability on developers for third-party misuse of open source code.
Meanwhile, Adams called the outcome a “good, sensible” one, adding that developers who write open-source smart contract code should not be held responsible when others use that code for fraud.
The decision arrives against a backdrop of regulatory scrutiny of decentralised platforms, including prior investigations into how such protocols are structured and marketed.
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