Judge dismisses class-action suit against Uniswap over token scam losses
The United States District Court for the Southern District of New York has dismissed a class-action suit against Uniswap Labs and its CEO, foundation and venture capital backers brought by plaintiffs who claimed they lost money due to scam tokens on the decentralized cryptocurrency exchange. Judge Katherine Polk Failla, who handed down the dismissal, is also hearing the Securities and Exchange Commission’s case against Coinbase.
The suit was brought by six individuals who bought tokens on Uniswap between December 2020 and March 2022. They argued on behalf of a “nationwide class of users” that Uniswap Labs controlled liquidity pools on the protocol, including those created by the scammers they lost money to.
The suit was filed in April 2022. The defendants were demanding the recission of the (smart) contracts they entered into to buy the scam tokens, with compensation, under the Securities Act of 1933 and the Securities Exchange Act of 1934.
The plaintiffs argued that their claim was backed up by the fact that Uniswap held “liquidity provider funds and newly created tokens in Uniswap’s proprietary core contracts,” used routers it controlled to process transactions on the protocol and issued liquidity tokens when pools were created. In addition, the plaintiffs held that the defendants “likely” held at least 88% of the Uniswap (UNI) governance tokens, although they had no actual knowledge of token ownership.
Related: Binance CEO warns of phishing scams as Uniswap founder gets hacked
The judge said in her order that neither side knew the identities of the scammers, and in place of suing the scammers for unlawful solicitation, the plaintiffs were suing the defendants for statements made on social media:
“Undaunted, they now sue the Uniswap Defendants and the VC [venture capital] Defendants, hoping that this Court might overlook the fact that the current state of cryptocurrency regulation leaves them without recourse, at least as to the specific claims alleged in this suit.”
The court did not overlook that fact:
“The Court declines to stretch the federal securities laws to cover the conduct alleged, and concludes that Plaintiffs’ concerns are better addressed to Congress than to this Court.”
The judge commented in more general terms as well. Writing about the plaintiffs’ allegations concerning the core and router contracts, she said:
“[I]t defies logic that a drafter of computer code underlying a particular software platform could be liable under Section 29(b) [ of the Exchange Act] for a third-party’s misuse of that platform.”
The judge cited the unsuccessful class action brought against Coinbase in 2022 for unregulated securities sales in her reasoning. She dismissed the case with prejudice, meaning the case cannot be retried.
Community commenters noted with pleasure that the decision showed a considerable depth of understanding of decentralized finance.
Big Lesson for crypto policymakers and financial regulators (and the administrative state at large):
If you choose to avoid the legal process, if you do not want to engage in good faith rulemaking, the courts will not bail you out. https://t.co/r5RATmiwwq
— Mike Wawszczak (@mikewawszczak) August 30, 2023
Magazine: Get your money back: The weird world of crypto litigation
The UK is ready to spend “well over” £100m on a possible deployment of British forces to Ukraine if Donald Trump secures a peace deal with Russia, the defence secretary has said.
John Healey also said Vladimir Putin views Britain as his “number one enemy” because of the country’s support for Ukraine.
The defence secretary’s plan includes the preparation of military personnel to join a multinational force that would be sent to help secure Ukraine’s borders if the US president brokers a ceasefire between Moscow and Kyiv.
He signalled British troops could be ready to deploy as soon as that happened and he said this could include soldiers on the ground.
Some of the anticipated money to prepare for any mission is already being spent.
The defence secretary also warned of a “new era of threat” and said the risk of wider conflict in Europe has not been as great since the end of the Second World War.
Mr Healey used a lecture at Mansion House in London to talk about efforts led by the UK and France to build a “coalition of the willing” of more than 30 nations to form what he called a “Multinational Force Ukraine” over the past six months.
At Mansion House this evening. Pic: PA
This force would help to secure Ukraine’s skies and seas and train its troops if Russia agrees to halt its full-scale war.
“So, as President Trump leads the push for peace here in Europe, we are ready to lead the work to secure it in the long-term,” the defence secretary said.
“For our Armed Forces, I am already reviewing readiness levels and accelerating millions of pounds of funding to prepare for any possible deployment into Ukraine.”
Asked how much money, he said it would be “well over” £100m.
British troops have been instrumental in the training of Ukrainian soliders throughout the conflict at camps like this one in East Anglia.Pic: PA
Mr Healey trumpeted the UK’s support for Ukraine, including a record £4.5bn in assistance this year, and taking over from the United States in co-chairing a wider group of nations that have been sending weapons and money to Kyiv.
“This is why President [Volodymyr] Zelenskyy calls the UK his closest ally,” he said.
“This is why Putin ranks Britain as his number one enemy.”
But he warned that as Russia’s aggression grew in Ukraine and beyond its borders, “Britain and our NATO allies stand more unified, and stronger”.
Read more:
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Vladimir Putin. Pic: Sputnik/Reuters
Giving a stark verdict of the security landscape, Mr Healey said: “This is – undeniably – a new era of threat. The world is more unstable, more uncertain, more dangerous. Not since the end of the Second World War has Europe’s security been at such risk of state-on-state conflict.”
He said this required what he described as “a new era for defence”.
He said: “This is now an age for hard power, strong alliances and sure diplomacy.”
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The defence secretary said plans for the new era would include increasing defence spending to 5% of GDP by 2035 – though critics have accused the UK and other European allies of playing smoke and mirrors with the target, questioning how much will really be spent on weapons and troops.
“As I look ahead to the rest of this decade, our task, in this new age of hard power is to secure peace in our continent and to forge stronger deterrence and resilience, a New Deal for European security,” said Mr Healey.
Turning to the Middle East, he also announced the UK was sending a two-star military officer to work as the deputy to the US commander, charged with monitoring the ceasefire between Israel and Hamas.
Politics
Govt to allow early release of thousands of rapists and violent criminals, Tories claim in sentencing row
The government will allow thousands of rapists, child sex offenders and other violent criminals to be released early from prison, the Conservatives claimed as a row over sentencing law reforms erupted.
Ahead of MPs debating the Sentencing Bill, introduced to tackle the growing prison population, on Tuesday, the Tories accused Labour of favouring criminals over victims and said the government’s approach is a “betrayal of victims”.
But Labour accused the Conservative Party of “rank hypocrisy” over prison overcrowding and the previous government’s early release policies.
The bill will restrict the use of short sentences and instead strengthen community punishments.
It will also include an “earned progression scheme”, which allows convicts who demonstrate good behaviour to be freed earlier, with enhanced supervision in the community followed by an unsupervised period on licence.
There will be a minimum release point of 33% for standard determinate sentences and a 50% minimum for more serious standard determinate sentences – as well as more tagging to monitor offenders in the community.
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Could a drone drop a gun into prison?
The Tories claim the bill as it is would mean 85% (6,500) of the most serious jailed offenders could qualify for early release because they are serving standard sentences, while more than 83% of child sex offenders and 62% of convicted rapists would serve reduced sentences.
They have tabled an amendment to the bill to ensure a carve out for the most serious crimes, so those who commit assault by penetration, rape, grievous bodily harm, stalking and sexual offences against children cannot be released early.
Under Labour plans to abolish custodial sentences below 12 months, the Tories calculated up to 43,000 offenders could avoid jail altogether.
They said the bill could lead to permanent leniency in sentencing.
Read more:
More jail time for criminals who refuse to attend sentencing hearings
Thousands of prison officers to get stab-proof vests
Conservative shadow justice minister Dr Kieran Mullan said: “Labour’s early release plan is a betrayal of victims and a gift to rapists and paedophiles. Keir Starmer is putting criminals before communities and letting predators out early.
“Under Labour’s plans, thousands of the most serious and sickening offences imaginable would no longer be treated as such. What an insult to thousands of victims across the country.
“Anyone who vote for these plans will have to explain exactly why these crimes do not count among the most serious offences.
“The Conservatives will fight this moral rot every step of the way.”
Justice Secretary David Lammy at Belmarsh prison. Pic: PA
But sentencing minister Jake Richards accused the Tories of “rank hypocrisy” as he said the previous government took prisons to “breaking point”.
He said Labour are “cleaning up the mess” left by the Tories and accused them of “feigned outrage”.
“The Conservatives’ rank hypocrisy is shameful. They built this crisis, then feigned outrage when the consequences arrived,” he added.
“They took our prisons to breaking point, released thousands of serious offenders early and pushed Britain to the brink of a situation where police could no longer make arrests and courts could no longer prosecute.
“That would have been a total collapse of law and order.
“Now they attack us for cleaning up the mess they made. They are behaving like arsonists complaining the fire service couldn’t stop the flame.
“This Labour government believes in prison and in punishment that cuts crime.
“We’re delivering the biggest prison expansion since the Victorians, reforming sentencing to keep the public safe and building a justice system worthy of the name.”
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