Uniswap wins another case that sets a new legal prescendent
TLDR: If you write open source smart contract code, and the code is used by scammers, the scammers are liable, not the open source devs
Lawsuit JunkedThat first lawsuit was thrown out in August 2023 and the decision was later upheld on appeal. The plaintiffs came back a second time, reshaping their complaint around state-level consumer protection claims. That attempt failed too.
Manhattan federal judge Katherine Polk Failla dismissed the case with prejudice on Monday — meaning the plaintiffs cannot bring the same claims to court again. Reports say the judge found that the group had not adequately shown that Uniswap had any knowledge of the fraudulent activity or that it had actively helped carry it out.
The distinction the judge drew was clear and direct. Creating a space where fraud could happen, she said, is not the same as helping commit the fraud itself. Reports note she compared the situation to a bank that unknowingly processes a money launderer’s transactions, or a messaging app whose service is used by someone dealing drugs. In both cases, the platform is not the one breaking the law — the person misusing it is.
Open-Source Code Is Not A CrimeUniswap operates differently from a traditional exchange. Anyone can list a token on it without going through an approval process, which is what makes it decentralized. That same openness is what the plaintiffs argued made it dangerous. The judge disagreed.
Reports say she wrote that offering ordinary services that could be used for both lawful and unlawful purposes does not make a platform liable for how bad actors choose to use those services.
Featured image from Unsplash, chart from TradingView
