Class-Action Lawsuit Hits Paradigm, Andreessen Horowitz, and More for Uniswap Scams
Uniswap Labs and its investors are getting hit with a class-action lawsuit over “rampant fraud.” Here’s what to know.
April 12 2022, Published 10:22 a.m. ET
Cryptocurrency exchange Uniswap Labs is at the center of a class-action lawsuit that alleges the network is teeming with fraudulent activity. And the defendants go beyond just Uniswap—the lawsuit even targets major investors Paradigm and Andreessen Horowitz.
Here’s what to know about the class-action lawsuit, what it means for Uniswap and other cryptocurrency exchanges, and how to get involved.
Class-action lawsuit highlights "rampant fraud" allegations against Uniswap and its investors
In the class-action lawsuit Risley v. Universal Navigation Inc, et al filed on April 4, plaintiff Nessa Risley of North Carolina alleged that cryptocurrency exchange Uniswap Labs is riddled with “rampant fraud.” Risley says the platform has subpar identity verification protocols and fraud-attracting fee structures that promote scams and illicit activity.
The lawsuit also targets Uniswap’s cohort of investors, including Paradigm Operations and Andreessen Horowitz (also knownas "a16z"). Other defendants include AH Capital Management, Union Square Ventures, Universal Navigation, and Hayden Z. Adams (founder and CEO of Uniswap).
Uniswap’s acceptance of crypto projects that result in rug pulls, pump-and-dump schemes, and other scams is enough to call it guilty, the plaintiff alleges. The suit specifically highlights assets such as “EthereumMax, Bezoge Earth, Matrix Samurai, AlphawolfFinance, Rocket Bunny, and BoomBaby.io,” the complaint reads.
The lawsuit states, “Defendants have profited handsomely from this unlawful activity, as have the Issuers to whom Uniswap paid hidden and exorbitant fees.”
Is the lawsuit legit?
The class-action suit is a complaint from a key plaintiff—but that plaintiff is going against some seriously big players in the Web3 space. More plaintiffs will likely need to hop on board for any significant outcome outside of a simple settlement or dismissal. However, Uniswap's practice of collecting fees on scams could lead to legal issues.
Can you still join the class-action lawsuit against Uniswap, a16z, and more?
The lawsuit says it’s looking to represent anyone who purchased the stated tokens on or after April 5, 2021, and was defrauded or scammed as a result. This includes anyone who purchased the assets through a Uniswap wallet or browser method. Based on the Securities Exchange Act of 1934, the lawsuit aims to control the sale of unregistered securities without adequate portrayal of risk or an attempt to increase security.
If the class-action lawsuit against Uniswap, a16z, and others proceeds, anyone impacted by the specified scams may receive a notice.
Uniswap not phased—launches venture arm amid the suit
On April 11, Uniswap announced it’s launching a venture capital arm to build its network of crypto companies. The new arm, Uniswap Labs Ventures, will target a variety of Web3 operations. Crypto enthusiast and venture capitalist Matteo Leibowitz will be at the helm, as will Uniswap’s current chief operating officer Mary-Catherine Lader.
All of this is to say that Uniswap is committed to the crypto vision, and the class-action lawsuit it’s currently facing among investors doesn’t seem to be phasing the company in the slightest.
