The Judge of the Critical Case Rejects the Case Against This Altcoin!

Court dismisses class action lawsuit against Uniswap for token fraud losses. Interestingly, Judge has rarely shown understanding of DeFi technology. He also stated that it would be better for the defendants to forward their complaints about the altcoin project to Congress.

Judge in Coinbase case dismisses case against this altcoin

The United States District Court for the Southern District of New York has dismissed a class action lawsuit brought against Uniswap Labs and its CEO, foundation, and venture capital supporters by plaintiffs who allege they lost money due to fraudulent tokens on the decentralized cryptocurrency exchange. Judge Katherine Polk Failla, who dismissed the lawsuit, is also considering the Securities and Exchange Commission’s lawsuit against Coinbase.

The lawsuit was filed by six people who purchased tokens from Uniswap between December 2020 and March 2022. In the name of “a nationwide class of users”, these individuals claimed that Uniswap Labs controls liquidity pools in the protocol, including those created by scammers who lost money. As you follow on Kriptokoin.com, the complainants filed the lawsuit against the altcoin project in April 2022. Under the Securities Act of 1933 and the Securities Exchange Act of 1934, the defendants sought reimbursement of (smart) contracts entered into to purchase fraudulent tokens.

Decision dismissing the lawsuit against Uniswap. Source: US District Court for the Southern District of New York

Court’s reasoning for refusal underlines important points

Plaintiffs argued that their claims are supported by the fact that Uniswap “holds liquidity provider funds and newly created tokens in Uniswap’s proprietary core contracts,” uses routers it controls to process transactions on the protocol, and issues liquidity tokens when pools are created. However, the plaintiffs have no actual knowledge of the defendants’ token ownership. Despite this, they stated that they “probably” hold at least 88% of altcoin governance tokens.

In his ruling, the judge noted that neither side, including the altcoin project, knew the identities of the scammers. He also noted that the plaintiffs did not sue the scammers for making illegal claims. Instead, he said, plaintiffs are suing defendants because of statements made on social media. In this context, the Judge highlighted the following:

Relentlessly, they are now suing Uniswap Defendants and VC [venture capital] Defendants. They also hope that this Court can overlook the fact that the current state of cryptocurrency regulation leaves them without recourse, at least in relation to the specific allegations made in this case.

Judge cited failed class action lawsuit against Coinbase

In addition, the Judge said, “The Court refuses to bend federal securities laws to cover alleged conduct. Also, it would be better for plaintiffs to direct their concerns to Congress rather than to the Court.” He underlined this fact. The judge also commented in more general terms. Concerning the plaintiffs’ claims regarding the altcoin project’s core and router contracts, “It would be illogical for the person who prepared the underlying computer code of a particular software platform to be liable under Section 29(b) [of the Exchange Act] for a third party’s misuse of that platform.” said.

In addition, the Judge cited the failed class action lawsuit filed against Coinbase in 2022 in his reasoning. Accordingly, he dismissed the case as prejudiced. Therefore, the case will not be reopened. Community commentators happily noted that the decision demonstrates a remarkable depth of understanding about DeFi altcoin projects.