In a groundbreaking move, Uniswap Labs has won dismissal of a four-year-long class-action lawsuit alleging scams involving fraudulent tokens, rug pulls, and pump-and-dump schemes on the Uniswap exchange. Manhattan judge officially pulled the plug on the case.
Judge Katherine Polk Failla of the U.S. District Court dismissed the second amended complaint. The case is permanently ended, and the plaintiffs, who claimed they lost money on rug pull tokens, cannot refile their claims against Uniswap Labs, said founder Hayden Adams.
The court shielded developers of open-source software by separating the tool from the crime. Judge Failla noted that providing a decentralized protocol where third parties might commit fraud does not equate to aiding that fraud.
She compared the situation to a bank or a messaging app, arguing that a bank isn’t liable for money laundering just because a criminal has an account there, nor is a messaging app responsible for illegal activities done by its users.
The verdict pointed out that it’s not valid to hold drafters of smart contract code responsible for how anonymous third parties choose to misuse it, especially when there was no evidence that Uniswap Labs had actual knowledge of the specific scams.
Adams responds to the ruling
Just after the dismissal, Uniswap founder Hayden Adams took to X to opine that the dismissal was a good, sensible outcome that protects the entire open-source community, and this case is setting a new legal precedent.
He pointed out that legal liability for scams should lie solely with the scammers, not the developers who contribute to the public infrastructure.
The native UNI token of Uniswap climbed around 3%, suggesting that investors are relieved to see a major legal cloud finally lifted from the protocol’s future.
Uniswap had a major change in its revenue model in recent months by activating the protocol fee switch across v2 and v3 deployments on multiple Layer 2 chains and the Ethereum mainnet, following successful governance votes that expanded fee capture to additional networks such as Base, Arbitrum, and others.
