Decentralized Exchange (DEX) Uniswap is accused of selling unregistered securities and hiding related risks to its users.
Uniswap user Nessa Risley invested about $10400 in low-cap digital tokens such as EthereumMax, Matrix Samurai and Rocket Bunny between May and July of last year.
It has since suffered “substantial losses” and is therefore seeking justice in court.
On April 4, Risley began legal action, alleging that Uniswap failed to conduct identity checks and impose restrictions on fraudsters who use the platform to post fraudulent digital tokens.
She is represented by the law firms of Kim & Serritella LLP and Barton LLP.
The companies also filed a class action lawsuit against Uniswap creator Hayden Adams and the venture capital firms that funded DEX: Andreessen Horowitz, Paradigm, Union Square Ventures and AH Capital Management.
They are accused of “violating securities laws by offering and selling securities in the form of digital tokens.”
The companies’ lawsuit seeks to invite victims who have lost money since last April on Uniswap to join a class action lawsuit against the platform’s founders and developers.
The suit alleges that Uniswap failed to disclose “registration statements,” including information about the risk of related investments in securities that were sold to users.
The class action lawsuit also alleges that Uniswap Labs allowed fraud and “pump and dump” strategies on its platform.
According to the lawsuit, Uniswap encouraged fraud by paying liquidity providers a portion of the commission for each transaction.
The exchange also charges a commission to developers with the ability to keep a portion of those funds.
The document concludes that conflicting interests have potentially made Uniswap a silent facilitator of fraud.
Last September, the Securities and Exchange Commission (SEC) opened an investigation into Uniswap Labs.