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The Commodities Futures Trading Commission announced a settlement with Uniswap Labs on Wednesday.
Per a press release, the CFTC found that the firm “illegally offered leveraged or margined retail commodity transactions in digital assets via a decentralized digital asset trading protocol.”
Uniswap will pay $175,000 to settle the allegations.
Users, according to the CFTC, could use liquidity pools when trading on the protocol.
Read more: CFTC’s Behnam warns crypto industry that more enforcement actions are coming
“Among the digital assets traded on the protocol and through the interface were a limited number of leveraged tokens, which provided users leveraged exposure to digital assets such as Ether and Bitcoin,” the CFTC said.
CFTC officials alleged that the tokens were leveraged or margined commodity transactions “that did not result in actual delivery within 28 days and therefore can be offered to non-Eligible Contract Participants only on a board of trade that has been designated or registered by the CFTC as a contract market,” and Uniswap Labs is not authorized as a contract market.
“Today’s action demonstrates once again the Division of Enforcement will vigorously enforce the CEA as digital asset platforms and DeFi ecosystems evolve” said director of enforcement Ian McGinley. “DeFi operators must be vigilant to ensure that transactions comply with the law.”
Read more from our opinion section: DeFi needs institutions — and regulation
Following the announcement, UNI jumped 6% on the news.
Uniswap didn’t immediately respond to a request for comment.
The crypto firm is also facing potential action from the Securities and Exchange Commission, which served the firm with a Wells notice earlier this year.