US court dismisses lawsuit against Uniswap cryptocurrency exchange for hosting scam tokens

A US court has rejected a lawsuit against Uniswap, a major decentralized cryptocurrency exchange, for its hosting of fraudulent tokens. The Southern District of New York court ruled that the exchange should not be held responsible for the scam tokens that appeared on its platform.

This lawsuit, which was initiated in 2022, claimed that Uniswap was operating as a broker-dealer without proper registration, offering unregistered securities, and allowing token issuers to deceive investors. It was alleged that a group of traders had purchased tokens like Matrix Samurai (MXS), Rocket Bunny (BUNNY), and Alphawolf Finance (AWF) on Uniswap, only to discover that these projects were fraudulent and that they had lost money due to manipulative token pricing. The plaintiffs argued that Uniswap, as it controlled the liquidity pools, routers, and the exchange itself, should be held accountable.

However, Judge Katherine Polk Failla ruled in favor of Uniswap, stating that the exchange should not be held responsible for the fraudulent tokens that appeared on its platform. She emphasized that the mere fact that the exchange charges transaction fees is not sufficient grounds to hold it liable.

Uniswap is the largest decentralized financial service (DEX) for the trading and exchange of cryptocurrencies, functioning through smart contracts without the need for a central intermediary, like traditional exchanges.

It's worth noting that decentralized exchanges, such as Uniswap, have been experiencing a decline in liquidity and market share since the previous year. DEXs have seen their market share decrease to 5%, and monthly trading volumes on these platforms have dropped by 71% since January 2022, reaching $

21 billion in July 2023.