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 SEC responded shortly after the issuers filed effective registration amendments for staked SOL and Ether exchange-traded funds.
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There is “no doubt” the UK “will spend 3% of our GDP on defence” in the next parliament, the defence secretary has said.
John Healey’s comments come ahead of the publication of the government’s Strategic Defence Review (SDR) on Monday.
This is an assessment of the state of the armed forces, the threats facing the UK, and the military transformation required to meet them.
Prime Minister Sir Keir Starmer has previously set out a “clear ambition” to raise defence spending to 3% in the next parliament “subject to economic and fiscal conditions”.
Mr Healey has now told The Times newspaper there is a “certain decade of rising defence spending” to come, adding that this commitment “allows us to plan for the long term. It allows us to deal with the pressures.”
A government source insisted the defence secretary was “expressing an opinion, which is that he has full confidence that the government will be able to deliver on its ambition”, rather than making a new commitment.
The UK currently spends 2.3% of GDP on defence, with Sir Keir announcing plans to increase that to 2.5% by 2027 in February.
This followed mounting pressure from the White House for European nations to do more to take on responsibility for their own security and the defence of Ukraine.
The 2.3% to 2.5% increase is being paid for by controversial cuts to the international aid budget, but there are big questions over where the funding for a 3% rise would be found, given the tight state of government finances.
While a commitment will help underpin the planning assumptions made in the SDR, there is of course no guarantee a Labour government would still be in power during the next parliament to have to fulfil that pledge.
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From March: How will the UK scale up defence?
A statement from the Ministry of Defence makes it clear that the official government position has not changed in line with the defence secretary’s comments.
The statement reads: “This government has announced the largest sustained increase to defence spending since the end of the Cold War – 2.5% by 2027 and 3% in the next parliament when fiscal and economic conditions allow, including an extra £5bn this financial year.
“The SDR will rightly set the vision for how that uplift will be spent, including new capabilities to put us at the leading edge of innovation in NATO, investment in our people and making defence an engine for growth across the UK – making Britain more secure at home and strong abroad.”
Sir Keir commissioned the review shortly after taking office in July 2024. It is being led by Lord Robertson, a former Labour defence secretary and NATO secretary general.
The Ministry of Defence has already trailed a number of announcements as part of the review, including plans for a new Cyber and Electromagnetic Command and a £1bn battlefield system known as the Digital Targeting Web, which we’re told will “better connect armed forces weapons systems and allow battlefield decisions for targeting enemy threats to be made and executed faster”.
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PM Sir Keir Starmer and Defence Secretary John Healey on a nuclear submarine earlier this year. Pic: Crown Copyright 2025
On Saturday, the defence secretary announced a £1.5bn investment to tackle damp, mould and make other improvements to poor quality military housing in a bid to improve recruitment and retention.
Mr Healey pledged to “turn round what has been a national scandal for decades”, with 8,000 military family homes currently unfit for habitation.
He said: “The Strategic Defence Review, in the broad, will recognise that the fact that the world is changing, threats are increasing.
“In this new era of threat, we need a new era for defence and so the Strategic Defence Review will be the vision and direction for the way that we’ve got to strengthen our armed forces to make us more secure at home, stronger abroad, but also learn the lessons from Ukraine as well.
“So an armed forces that can be more capable of innovation more quickly, stronger to deter the threats that we face and always with people at the heart of our forces… which is why the housing commitments that we make through this strategic defence review are so important for the future.”
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