Uniswap lawsuit dismissed with prejudice; court rules platform not liable for third-party fraud

ChainCatcher report: A U.S. federal judge has dismissed the remaining state-law claims against Uniswap Labs and its founder, Hayden Adams, bringing an end to this multi-year class action lawsuit. The plaintiffs sought to hold the platform liable for losses incurred from trading “scam tokens” on the Uniswap protocol. On Monday, Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York issued a dismissal with prejudice of the plaintiffs’ second amended complaint, finding that they failed to state a viable legal claim. The court noted that the plaintiffs had been granted multiple opportunities to amend their pleadings but still could not demonstrate that Uniswap should be held responsible for the misconduct of unnamed third-party token issuers. The plaintiffs claimed losses due to “rug pulls” and “pump-and-dump” schemes and argued that Uniswap “aided and abetted fraud” by providing a platform that matches buyers and sellers. However, the court explicitly stated that merely operating a decentralized trading platform does not constitute “substantial assistance” in fraud. Judge Failla reaffirmed her prior position that holding developers of smart contract code liable for third-party abuses on a decentralized platform is “logically untenable.” The case was originally filed in 2022 and initially included federal securities law claims. Those securities-related claims were dismissed in 2023, a ruling later upheld by the Second Circuit Court of Appeals, which remanded the remaining state-law claims to the district court. This latest ruling formally concludes the case and further narrows the scope under which state law may impose liability on DeFi platform developers.