Washington, D.C. — The Commodity Futures Trading Commission, as part of its continuing enforcement focus in the digital asset decentralized finance (DeFi) space, today issued an order filing and settling charges against Universal Navigation Inc. d/b/a Uniswap Labs, a Delaware company based in New York. The order finds Uniswap Labs illegally offered leveraged or margined retail commodity transactions in digital assets via a decentralized digital asset trading protocol. The order requires Uniswap Labs to pay a $175,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act (CEA), as charged. 

“Today’s action demonstrates once again the Division of Enforcement will vigorously enforce the CEA as digital asset platforms and DeFi ecosystems evolve” said Director of Enforcement Ian McGinley. “DeFi operators must be vigilant to ensure that transactions comply with the law.” 

Case Background 

Uniswap Labs contributed to the development, and deployed versions, of a blockchain-based digital asset protocol that offered to non-Eligible Contract Participants and institutional users in the United States and abroad the ability to trade digital assets through use of the Ethereum blockchain. The protocol allows users to create and trade with liquidity pools, which consist of a matched pair of digital assets that are valued against each other. 

In order to facilitate access to the protocol, Uniswap Labs developed and maintained a web interface that it made available to users. Through the interface, users could trade in hundreds of liquidity pools on the protocol. Among the digital assets traded on the protocol and through the interface were a limited number of leveraged tokens, which provided users leveraged exposure to digital assets such as Ether and Bitcoin. The order finds these leveraged tokens are leveraged or margined commodity transactions that did not result in actual delivery within 28 days and therefore can be offered to non-Eligible Contract Participants only on a board of trade that has been designated or registered by the CFTC as a contract market, which Uniswap Labs was not. 

As stated in the order, the CFTC recognizes Uniswap Labs’ substantial cooperation with the Division of Enforcement’s investigation of this matter in the form of a reduced civil monetary penalty. 

The Division of Enforcement staff responsible for this matter are Devin Cain, K. Brent Tomer, Lenel Hickson, Jr., and Manal M. Sultan. 

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The CFTC strongly urges the public to verify a company’s registration with the CFTC before committing funds.  If unregistered, a customer should be wary of providing funds to that company. A company’s registration status can be found using NFA BASIC.  More information can be found at cftc.gov/check. 

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the CFTC Whistleblower Office at whistleblower.gov. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.