The US Commodity Futures Trading Commission (CFTC) has fined Uniswap Labs, the company behind the DeFi platform Uniswap, over $170,000.

In a statement, the federal office argues that the monetary penalty is due to the company illegally offering leveraged retail commodity transactions to cryptocurrencies . This penalty forces Uniswap to cease and desist from violating the Commodity Exchange Act (CEA).

The CFTC has been monitoring Uniswap for several months, reflecting a growing focus on cryptocurrency and DeFi platforms. Ian McGinley, the CFTC’s Director of Enforcement, comments that the action demonstrates that his Division “will vigorously enforce the CEA as digital asset platforms and DeFi ecosystems evolve.”

McGinley stressed that “DeFi operators must be vigilant to ensure that transactions comply with the law.”

According to the federal office’s indictment, Uniswap Labs facilitated access to its protocol through a web interface that allowed users to trade hundreds of liquidity pools. These included tokens that offered leveraged exposure to assets such as bitcoin (BTC) and ether (ETH), among hundreds of other tokens and cryptocurrencies.

The CFTC considers these tokens to be leveraged commodity transactions that did not result in actual delivery within 28 days, which can only be offered on CFTC-regulated exchanges.

The order also acknowledges Uniswap Labs’ cooperation during the investigation, resulting in a reduction of the civil monetary penalty against the company, which is behind one of the most prominent exchanges in the DeFi ecosystem, with over $59 million in daily trading volume.

At the time of writing, Uniswap has not issued any comments regarding the CFTC penalty against it. There are no posts on its X account or on its official website.

This action by the CFTC underscores the growing regulation in the sector, similar to the intentions of the Securities and Exchange Commission (SEC), another US federal agency, to take action against Uniswap.

Following the news, the exchange’s native UNI token experienced a sudden drop from $6.61 to $6.38, reflecting the market’s sensitivity to regulatory news. However, the token’s price was quick to react, rebounding strongly to stabilize around $6.58, according to data provided by CoinMarketCap.

UNI price had a sudden drop but then recovered. Source: CoinMarketCap.

This move suggests a quick recovery and investor confidence in the future of Uniswap, despite the fine imposed by the CFTC.

However, the monetary penalty sends a clear message to the entire DeFi ecosystem about the need to comply with existing regulations. The CFTC has shown its willingness to sanction platforms that do not comply with commodity trading laws, setting a precedent for future regulations in the crypto and DeFi space.