- SDNY Judge Katherine Polk Failla ruled that the “self-driving” software Uniswap was not responsible for losses users suffered due to scams and ponzis.
- Judge Failla who threw out the lawsuit against Uniswap, Paradigm et al also presides over SEC vs. Coinbase.
- Crypto proponents noted the industry’s growing momentum in the court as a sign the SEC could lose against Brian Armstrong’s crypto exchange.
- The SEC lost to Grayscale in court and was handed a partial defeat in its securities campaign against Ripple’s XRP token.
The judicial tides could be turning for crypto service providers in the U.S. like Coinbase following back-to-back court victories amid a deluge of lawsuits from financial watchdogs like the Securities and Exchange Commission and private opposers alike.
Uniswap Wins Lawsuit
On August 30, SDNY Judge Katherine Polk Failla ruled in favor of decentralized exchange Uniswap. The class action lawsuit sought to hold Uniswap, Paradigm, et al responsible for users’ losses and damage caused by illicit third-party actors.
The lawsuit’s argument was built around losses that users incurred from investing in scam tokens and crypto Ponzi schemes traded on Uniswap. As the deployers are anonymous and difficult to trace, the aggrieved parties turned their sights to Uniswap in a bid
Judge Failla said there wasn’t sufficient evidence to prove that Uniswap developers should be held liable for misuse of their software.
The ruling is a major win for DeFi participants since the court ruled in favor of DeFi software and its developers. Uniswap’s case also leaves questions regarding the crackdown on Tornado Cash and developers Alexey Pertserv, Roman Storm, and Roman Semenov, all of whom were arrested for their ties to the crypto mixer.
Hope For Coinbase
SDNY Judge Katherine Polk Failla also presides over the SEC vs. Coinbase case in which the SEC filed securities violation claims. Coinbase CEO Brian Armstrong and Chief Legal Officer Paul Grewal both refitted the SEC’s claims, signaling the start of a lengthy litigation process.
Grayscale emerged victorious over the SEC 14 months after going to court with the commission. The SEC remained adamant in rejecting Grayscale’s conversion of its GBTC fund to a spot Bitcoin ETF, citing market manipulation concerns.
A trio of judges completely sided with Grayscale and ruled against the SEC’s rejection of Grayscale’s ETF application.
“The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar product,” said United States Court of Appeals for the DC Circuit. The ruling pointed to the SEC’s approval of Bitcoin Futures ETF, a similar product to the high-sought-after spot Bitcoin ETF.
“The courts remain our last, best hope” said Coinbase CLO Paul Grewal after the news.
