- SDNY Judge Katherine Polk Failla ruled that the “self-driving” software Uniswap is not responsible for the losses suffered by users due to fraud and Ponzi schemes.
- Judge Failla, who dismissed lawsuits against Uniswap, Paradigm and other companies, also presided over the SEC’s lawsuit against Coinbase.
- Cryptocurrency supporters point to the industry’s growing momentum in court as a sign that the SEC may lose to Brian Armstrong’s cryptocurrency exchange.
- The SEC lost to Grayscale in court and in part in its securities campaign against Ripple’s XRP token.
The judicial tide may be turning as U.S. cryptocurrency service providers such as Coinbase score successive court victories amid a slew of lawsuits filed by financial regulators such as the U.S. Securities and Exchange Commission and private opponents.
Uniswap wins lawsuit
On August 30, SDNY Judge Katherine Polk Failla ruled in favor of decentralized exchange Uniswap. The class action lawsuit seeks to hold Uniswap, Paradigm and others responsible for user losses and damages caused by illegal third-party actors.
The lawsuit’s arguments revolve around losses suffered by users as a result of investing in scam tokens traded on Uniswap and a crypto Ponzi scheme. Since the deployers are anonymous and difficult to trace, the injured parties turn their attention to Uniswap
Judge Failla said there was insufficient evidence to prove that Uniswap developers were responsible for the abuse of their software.
The ruling is a major victory for DeFi participants as the court ruled in favor of DeFi software and its developers. Uniswap’s case also raises questions about the crackdown on Tornado Cash as well as developers Alexey Pertserv, Roman Storm and Roman Semenov, who were all arrested for their ties to the cryptocurrency mixer.
Hope Coinbase
SDNY Judge Katherine Polk Failla also presided over the SEC v. Coinbase case, in which the SEC brought securities violation charges. Coinbase CEO Brian Armstrong and Chief Legal Officer Paul Grewal both revised the SEC’s claims, marking the beginning of a lengthy litigation process.
After 14 months of going to court with the SEC, Grayscale won the SEC lawsuit. The U.S. Securities and Exchange Commission remains steadfast in its refusal to allow Grayscale to convert its GBTC fund into a spot Bitcoin ETF, citing concerns about market manipulation.
Three judges sided entirely with Grayscale, ruling that the SEC rejected Grayscale’s ETF application.
The U.S. Court of Appeals for the D.C. Circuit said: “The rejection of Grayscale’s proposal is arbitrary and capricious because the Commission failed to explain its disparate treatment of similar products.” The ruling indicates that the SEC approved a Bitcoin futures ETF, The product is similar to the highly popular spot Bitcoin ETF.
“The courts remain our last and best hope,” Coinbase CLO Paul Grewal said after the news broke.
