Court Finds DEX's can't be sued While Bitcoin and Ethereum deemed commodities

Court Finds DEX's can't be sued While Bitcoin and Ethereum deemed commodities

Happy weekend Lions! I trust you have all been safe and well and had a wonderful end to the week. This week ended with some great news and ends a long term "What If" or ''Can It?" in relation to centralised exchanges and their ability to be held accountable or more so sued for errors, scams and trades on their projects.

It also provides a definitive answer to the ownership of our own wonderful Blockchain Hive and how it's decentralised nature might be interpreted by the courts.

As it turns out, decentralised protocols or projects can't actually be sued and nor their owners or creators, which is what we learned this week when a group of Uniswap users tried to sue the protocol.

A New York Court dismissed a class action against Uniswap which alleged Uniswap was responsible for scam coins being issued and traded on the site.

Although the news comes as a good sign for decentralisation it is not as simple as that and there might be changes made in the future. But let's take a look at the ruling.

image source

The Case Particulars

As it turns out the judge assessed the case against current provisions of the federal securities laws to see if the developers and investors of Uniswap could be found in breach of laws as they are currently written. Unfortunately for the class action the Judge was unable to find anything that could be used to hold decentralised exchanges to account.

The judge noted that the current state of Crypto Currency and the decentralised nature of Uniswap which enables anyone to develop and launch a digital token leaving their identity unknow, did live them with identifiable harm.

They hoped that the court would overlook the fact that there were no regulations in place and support them with recourse against the VC and developers of Uniswap however, the court dismissed their complaint in full.

An interesting side note is that one of the defendants was from Australia which has given me some hope that I might be able to actually have a position in the case against Do Kwon and Terra Form Labs.

An important aspect of the case and it's findings is important to Hive as the class action tried to associate owning a stake in Uniswap via governance tokens and providing liquidity as ownership. This was also dismissed by the judge meaning that those of us who own and stake Hive are not owners nor can we be held liable for things that occur on Hive.

The dismissal also extends to development undertaken as the person they tried to associate leadership to, further wrote and developed the code that enables Uniswap to undertake trades without human involvement.

securities, commodities, or something else

The court sees anyone with a basic understanding of how to create an Ethereum token and does is seen as a "developer". Each ERC-20 can become registered as a security with the Securities and Exchange Commission (SEC) however, not many have. That is because the congress and the courts have not made a definitive decision on what Crypto Currencies are or did they just do that.....

Bitcoin and Ethereum are found to be Commodities

While the SEC continues to battle out what crypto currencies are this court case finally defines what the number one and two tokens are and deems them as commodities. If you scoot down to page 35 the Judge refers and states that Bitcoin and Ethereum are in fact, commodities.

They also point out that Uniswap can't be held liable because it seeks approval from the investors to undertake the trade swap and that the "scams" are not being undertaken by Uniswap but by the tokens that have been developed and written on Ethereum.

It also finds that Ethereum is a commodity because of the ERC which is short for Ethereum Requests for Comments and are developed to provide a decentralised community based transaction uniformed across the entire network.

The biggest blow came in the rebuttal from the judge on the example provided that not holding Uniswap liable for scams undertaken on their platform is like not holding software developers of a self driving car that fails and causes harm or death liable.

The judge complete dismissed this point of arguing stating that holding Uniswap to account for what another developer has done is akin to holding Venmo or another payment app liable for a drug deal purely based on the fact they used the platform to transfer money.

The judge went as far as to relay it in the same terms as the case did. Holding a developer of a self driving car accountable for the car being used in a bank robbery.

The case is quite large and a lot occurred I would highly recommend people reading it through and it is something that is valid to anyone and everyone on Hive. And we finally got a determination on what Bitcoin and Ethereum are, which no doubt will cause the SEC further headaches.

image sources provided supplemented by Canva Pro subscription. This is not financial advice and readers are advised to undertake their own research or seek professional financial services.