Uniswap Labs and its founder Hayden Adams have secured a major legal victory after a federal judge dismissed a class action lawsuit accusing the decentralized exchange of enabling crypto “rug pulls” and scam tokens.
In a decision issued by Manhattan federal judge Katherine Polk Failla, the court ruled that Uniswap cannot be held responsible for fraudulent tokens created and issued by unknown third parties. The dismissal was made with prejudice, meaning the plaintiffs cannot refile the case.
The lawsuit, led by investor Nessa Risley, originally targeted Uniswap, Adams, and venture capital firms including Paradigm, Andreessen Horowitz, and Union Square Ventures. The group first filed the complaint in April 2022, alleging that the platform facilitated scam projects and pump-and-dump schemes.
The case was initially dismissed in August 2023 and that ruling was later upheld on appeal. Plaintiffs then amended their complaint in May, shifting their focus to alleged violations of state-level consumer protection laws. However, the court again found the claims insufficient.
Judge Says Platforms Aren’t Liable for Third-Party Crypto Scams
In her ruling, Judge Failla emphasized that the plaintiffs failed to show that Uniswap had knowledge of any fraud or substantially assisted in its execution. She noted that simply providing a platform where misconduct can occur does not amount to legal responsibility for that misconduct.
The judge compared the situation to traditional financial and technology services, explaining that a bank is not liable if a criminal launders money through its accounts, just as a messaging app is not responsible if users coordinate illegal activities on its platform.
According to the court, Uniswap’s role in providing open-source smart contract infrastructure does not equate to participating in fraudulent token schemes. The ruling reinforces the distinction between platform providers and bad actors who misuse those platforms.
Following the decision, Adams described the outcome as “good and sensible,” adding that developers who create open-source code should not be held liable when scammers exploit that code. He argued that responsibility lies with the individuals committing fraud, not with the developers building neutral tools.
