In a Bloomberg Law article, litigation & enforcement partner Helen Gugel discussed a recent court ruling that has positive implications for the cryptocurrency industry.
The ruling declined to hold decentralized finance crypto exchange Uniswap liable for third-party fraud. Dismissing the Risley v. Univ. Navig Inc. lawsuit, Judge Katherine Polk Failla in the US District Court for the Southern District of New York said the exchange was not liable under existing law for users’ alleged losses.
This provides a sense of Judge Failla’s thinking about the interaction between crypto and securities laws. Her views are important because the judge is overseeing the Securities and Exchange Commission’s suit against leading crypto exchange Coinbase, a case that could reshape the industry.
“While the facts in the Coinbase case differ, it may be significant that Judge Failla refused to expand the scope of federal securities laws from the bench and instead placed the burden on Congress to enact new laws in order to fill the gaps in the current regulatory landscape,” said Helen.
Judge Failla includes a reference in her Uniswap ruling to crypto token Ethereum being a commodity. “That description may hint at Judge Failla’s thinking on the categorization of certain crypto assets as commodities or securities, which will be critical to the outcome of the Coinbase suit,” said Helen.
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