The United States Commodity Futures Trading Commission (CFTC) has accused decentralized exchange (DEX) developer Uniswap Labs of illegally offering leveraged cryptocurrency trading to US retail investors. The CFTC claims Uniswap Labs violated the Commodity Exchange Act (CEA) by offering these leveraged tokens, according to a Sept. 4 announcement.
Uniswap Labs has agreed to settle the charges by paying a $175,000 civil penalty and by agreeing to stop offering leveraged cryptocurrency trading to US retail investors. The CFTC’s enforcement division emphasized that they will continue to enforce the CEA as digital asset platforms and DeFi ecosystems evolve.
Two CFTC commissioners, Summer Mersinger and Caroline Pham, have expressed their disagreement with the CFTC’s handling of the enforcement action. The statement criticized the agency for “regulation through enforcement” and argued for clearer guidelines for DeFi protocols. Pham argued that the CFTC violated the Administrative Procedure Act by establishing sweeping interpretations in an administrative settlement order without engaging in notice-and-comment rulemaking.
The CFTC’s jurisdiction extends to commodity derivatives products, which include leveraged tokens. The SEC, on the other hand, has argued that the majority of digital assets are securities. In April, the SEC alleged that Uniswap was operating an unregistered securities exchange. Uniswap responded by stating that it is a software company that reimagines market structures, not a securities exchange.
Uniswap is one of the most popular DeFi protocols, facilitating token swaps on multiple blockchain networks. As of September 4, it held more than $4.3 billion in total value locked (TVL), according to DefiLlama.
