The US Appeals Court for the Second Circuit issued a decision on Wednesday a great extent to a large extent on a lower court’s decision from 2023 to throw a class case against decentralized exchange uniswap.
A group of investors initially sued Uniswap laboratories, the company behind the decentralized protocol of the same name, and some of its venture capital investors in 2022, claiming the company was responsible for damaging investors by allowing the scam -tokens to be issued on its protocol.
District Judge Katherine Polk Failla from the southern district of New York (SDNY) sided with Uniswap in 2023 and scrapped the case before going to trial, comparing the plaintiffs’ arguments to “a case trying to have an application like Venmo or Zelle, responsible for a drug handle to facilitate a fond of a fond.”
The applicants appealed Failla’s decision in September 2023, but were largely shut down by the fresh decision of the second circuit on Wednesday. The second circuit judges confirmed Failla’s decision to throw away the plaintiffs’ claims in accordance with both the Securities Act and the Exchange Act and wrote:
“In the sum, we agree with the court that the ‘trosing logic’ that a drawing of a smart contract, a computer code, could be held responsible according to the Exchange Act for a third -party user’s abuse of the platform,” the archiving read.
The only part of Failla’s decision that was relocated and withheld back to a court – which means the lower court will hear this column of the plaintiffs’ case again – was the state’s legal requirements that essentially try to try similar accusations under the state rather than federal law in New York, North Carolina and Idaho.
The ruling is a victory for Uniswap, fresh from the heels of Tuesday’s announcement that the US Securities and Exchange Commission (SEC) would drop its investigation into the decentralized exchange that was investigated as an unregistered securities broker and unregistered values, as well as a unregistered security.
Read more: SEC DROPS Investigation of Uniswap, will not submit enforcement measures
