Crypto Biz: US regulators crack down on Uniswap

A recent enforcement action in the United States has intensified the scrutiny over decentralized finance (DeFi) protocols, which have largely operated within a regulatory gray zone. 

Regulators again targeted the decentralized trading platform Uniswap for allegedly facilitating illegal derivatives trading. The Commodity Futures Trading Commission (CFTC) has imposed fines and ordered Uniswap to cease the alleged violations. The move is indicative of the increasing regulatory focus on DeFi front ends as authorities seek to bring protocols into compliance with existing financial regulations.

In another headline, Bitfarms has issued a response to Riot Platforms’ recent push for changes to its board of directors, marking the latest development in the two firms’ ongoing corporate struggle. 

Riot, now the largest shareholder in Bitfarms, with a 19.9% stake, has been pressuring the company for additional governance reforms, proposing the election of independent board members. Bitfarms, however, argues that its recent board changes were made independently of Riot’s influence and are in the company’s best interests.

This week’s Crypto Biz also explores several key developments from the US Securities and Exchange Commission, including a stay agreement with Ripple, the delay in a decision on an eco Bitcoin (BTC) exchange-traded fund (ETF), and a potential challenge to FTX’s repayment plan.

CFTC charges Uniswap with illegal derivatives trading

The CFTC has filed charges against Uniswap, alleging that the decentralized exchange facilitated illegal derivatives trading. The charges claim that Uniswap allowed users to trade unregistered derivatives products, violating US commodity trading regulations. The protocol developer will have to pay a $175,000 civil penalty and cease activities that may violate the Commodity Exchange Act. The case represents a significant move by regulators to enforce existing laws on DeFi platforms, raising questions about how decentralized projects might navigate legal frameworks in the future.

Ripple and SEC agree to stay $125 million judgment, hinting at appeal

Ripple Labs and the SEC have agreed to delay a $125 million fine imposed on Ripple in connection with the legal battle between the regulator and the crypto company. The court ruling determined XRP’s (XRP) status as a non-security in certain contexts, and this stay potentially sets the stage for an appeal by the SEC. Ripple has placed 111% of the judgment amount, roughly $139 million, into a bank account, pending the resolution of any appeal. Both parties now await the court’s approval of this agreement, which could further extend legal proceedings that began in 2020​. 

US regulator again delays decision on eco-friendly Bitcoin ETF

The SEC has again postponed its decision on an ETF that would combine spot Bitcoin with carbon credit futures. Initially filed by Tidal Investments, the ETF aims to offer exposure to Bitcoin while offsetting carbon emissions through futures tied to emission allowances in the European Union and California. The SEC’s latest delay extends the decision deadline to Nov. 21, 2024, continuing the trend of regulatory hesitations around such eco-focused financial products​.

SEC says it could challenge FTX crypto repayment plan

The SEC has warned that it could challenge payments made to creditors of the defunct crypto exchange FTX if the exchange chooses to return funds using stablecoins. In an Aug. 30 filing, lawyers from the SEC said that while creditor repayments made with stablecoins may not be technically illegal, it reserved the right to challenge repayments made with US-dollar pegged crypto assets. While many creditors have called for in-kind payments, FTX’s most recent liquidation plan has agreed to pay out creditor claims based on the US dollar value of asset prices at the time of the exchange’s bankruptcy in cash or with stablecoins.Crypto Biz is your weekly pulse on the business behind blockchain and crypto, delivered directly to your inbox every Thursday.