Uniswap's motion to dismiss the class action lawsuit over fraudulent tokens was granted in full, with the court ruling that the platform is not responsible for third-party actions

A U.S. federal judge ruled to dismiss the remaining state law claims against Uniswap Labs and its founder Hayden Adams, effectively ending a years-long class action lawsuit.

The plaintiffs attempted to hold the platform liable for losses incurred from "fraudulent tokens" traded on the Uniswap protocol. Judge Katherine Polk Failla of the Southern District of New York issued the ruling on Monday, dismissing the plaintiffs' second amended complaint "with prejudice," finding that the plaintiffs failed to present a viable legal claim. The court noted that the plaintiffs had multiple opportunities to amend their complaint but still could not demonstrate that Uniswap was responsible for the misconduct of unnamed third-party token issuers.

The plaintiffs claimed to have suffered losses due to actions such as "rug pulls" and "pump-and-dump" schemes, arguing that Uniswap "aided fraud" by providing a platform for buyers and sellers to trade. However, the court clearly stated that merely providing a decentralized trading platform does not constitute "substantial assistance" to fraudulent activities. Judge Failla reiterated her previous view that holding developers of smart contract code liable for the misuse of third parties on decentralized platforms is "logically untenable." The case was initially filed in 2022 and originally included federal securities law claims. The related securities claims were dismissed in 2023, and the Second Circuit Court of Appeals upheld that ruling, remanding the remaining state law claims to the district court for consideration. This ruling signifies the formal conclusion of the case and further tightens the applicability boundaries of state law liability for DeFi platform developers.

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