A recent statement of the second Circuit Court of Appeals in a Uniswap Labs case again confirms that neutral, decentralized software makers should not be held liable for the abuse of third parties of that technology.
According to an article Of the Defi -Education Fund, the decision strengthens legal protection for decentralized financial (Defi) developers and marks an important moment for developers.
Neutral technology
The lawsuit against UNISWAP Labs and certain risk capital investors claimed violations of American securities laws by making the trade of “swingteltokens” on the Decentralized Exchange (Dex) uniswap possible.
A central question in the case was whether the smart contracts of Uniswap formed a contractual agreement under the federal securities laws. The American court for the southern district of New York initially rejected the case, but it was appealed for the second circuit.
The claimants tried to hold Uniswap Labs responsible, with the argument that the developers and investors were direct sellers of the disputed tokens or asked their sale.
The second circuit ruled that these contracts do not fall under the dissolution provisions of the Exchange Act and that smart contracts on Uniswap operate as umbrella user agreements instead of securities transactions.
The court also noted that, even if any trade could be considered a separate contract, the contractual relationship existed between the Token -Maker or Liquidity Provider and the Buyer, not between the buyer and Uniswap Labs.
Moreover, the statement emphasized that the smart contracts of Uniswap only function as automated tools for carrying out transactions. It compared the Defi -Platform liable for keeping Nasdaq or the New York Stock Exchange that is responsible for fraudulent stock purchases at their trade fairs.
By confirming this distinction, the ruling protectors Defi developers are held responsible for fraudulent activities of third parties that are facilitated by their technology.
Moreover, the decision reinforces that Defi protocols, such as traditional financial infrastructure, offer a framework for transactions instead of acting as counterparties in those transactions.
Wider implications
The article emphasized that the ruling corresponds to discussions about Defi Regulation and Developer Liability. It strengthens that Defi -Protocols are neutral platforms instead of active participants in transactions that have been carried out on it.
This principle contrasts with the US government’s position against Tornado Cash and Samourai Wallet Developers, where authorities have argued for broad liability based on alleged abuse of decentralized software.
The ruling of the court, issued as a summary order, has no formal precedential value, but indicates that existing securities laws do not easily extend to Defi infrastructure.
The Defi Education Fund believes that this perspective will probably influence future legal challenges and regulatory discussions with regard to the liability of software developers in decentralized ecosystems.
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