A New York court has classified two major cryptocurrencies, Ethereum ETH/USD and Bitcoin BTC/USD, as commodities, while dismissing a proposed class action lawsuit against decentralized crypto exchange Uniswap.
What Happened: The lawsuit, filed in April 2022, claimed that Uniswap had violated U.S. securities laws by operating as an unregistered exchange and offering securities without proper registration.
The lawsuit sought to hold Uniswap accountable for investors’ losses to “scam tokens” traded on the platform, including Ethereum-based tokens such as EthereumMax (EMAX), Bezoge (BEZOGE), and Alphawolf Finance (AWF).
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Why It Matters: However, the court ruling stated that the true defendants in the case were the issuers of the “scam tokens” and not Uniswap.
Despite Securities and Exchange Commission (SEC) Chief Gary Gensler refraining from labeling ETH as a security, Judge Katherine Polk Failla of the Southern District of New York explicitly categorized it as a commodity. The judge declined to extend federal securities laws to cover the allegations against Uniswap.
“[…] in the context of a decentralized protocol's smart contracts, the Court finds that the smart contracts here were themselves able to be carried out lawfully, as with the exchange of crypto commodities ETH and Bitcoin," the statement from the Judge read.
Photo: Created with an image from Shutterstock and Third Way Think Tank on Flickr
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