Same case, different verdicts: Why can Uniswap be acquitted while Tornado Cash cannot?

Author: Eric, Foresight News

At dawn on March 3rd Beijing time, a class-action lawsuit demanding Uniswap and its founder Hayden Adams be held responsible for scam tokens on Uniswap was dismissed by the U.S. District Court for the Southern District of New York. Brian Nistler, General Counsel of the Uniswap Foundation, called it “a milestone ruling for DeFi.”

Hayden Adams also tweeted, “If you write open-source smart contract code and scammers use that code, then responsibility lies with the scammers, not the open-source developers. This is a reasonable and fair outcome.”

For Web3 developers, this is undoubtedly good news. But little known is that the judge who issued this “justice ruling” is the same person who previously found Tornado Cash developer guilty during the tenure of former SEC Chair Gary Gensler.

The Final Judgment

It has been nearly four years since the class-action lawsuit against Uniswap was filed until today’s dismissal.

In April 2022, Uniswap users represented by Nessa Risley filed a class-action lawsuit in court, accusing defendants including Paradigm, a16z, Uniswap, and its founder Hayden Adams of violating federal securities laws by issuing and selling unregistered securities, including UNI tokens, on Uniswap. The lawsuit also alleged that the defendants failed to register Uniswap as an exchange or broker-dealer under applicable securities laws and did not provide investors with registration statements for the securities they issued and sold.

This lawsuit was initiated by the law firms Kim & Serritella and Barton, representing users who traded EthereumMax, Bezoge, MatrixSamurai, Alphawolf Finance, RocketBunny, and BoomBaby.io tokens on Uniswap between April 5, 2021, and April 4, 2022.

The phrase “unregistered securities” was particularly damaging to the crypto industry at the time, but surprisingly, the lawsuit quickly turned in favor of Uniswap.

The presiding judge, Katherine Polk Failla, although acknowledging that the “scam tokens” identified by the plaintiffs were indeed securities, believed Uniswap was not responsible. Failla argued that Uniswap’s decentralized nature meant the protocol could not control which tokens were listed or who could interact with it. “This case is more like holding the developers of autonomous vehicles responsible for third-party traffic violations or bank robberies committed using the vehicle,” she said.

Accordingly, in August 2023, Failla dismissed the federal securities law charges. The plaintiffs appealed, and the Second Circuit Court of Appeals in 2025 upheld the dismissal of the federal claims but remanded the state law claims for reconsideration.

Subsequently, the plaintiffs amended their complaint and refiled. This time, investors who lost money accused Uniswap and others of aiding and abetting fraud and false statements, profiting from scam token transactions, and violating multiple state fraud laws.

After Judge Failla’s reconsideration, the amended claims were again dismissed with prejudice, and no further amendments were allowed. The case was finally closed.

The reasons given by the judge were largely the same as before: Uniswap was unaware of the scam tokens, and even if aware, did not provide substantial assistance. It also did not meet the legal definition of fraud under any state law. Regarding unjust enrichment, Uniswap did not derive direct benefits, and the claim that such scams expanded the user base for indirect gains was too speculative.

Brian Nistler tweeted that, quoting a line from the previous ruling, it is “illogical” to hold smart contract coders responsible for third-party misuse of the platform.

Another Outcome for Tornado Cash

Facing the same judge, Tornado Cash’s Roman Storm met a different fate.

Tornado Cash was first sanctioned by the U.S. Office of Foreign Assets Control (OFAC) on August 8, 2022, accused of helping criminals, including North Korean hackers, launder over $7 billion. Two days after being sanctioned, Dutch police arrested Alexey Pertsev, one of Tornado Cash’s core developers.

On May 14, 2024, a Dutch court convicted Pertsev of money laundering and sentenced him to 64 months in prison. The court found that Pertsev knew his platform was used for criminal activities but did not stop it, tacitly approving Tornado Cash as a money laundering tool. Pertsev is currently appealing, with no recent updates.

Seven months before Pertsev’s conviction, the U.S. Department of Justice sued two other developers, Roman Storm and Roman Semenov, in the Southern District of New York. Storm had been arrested in Washington State, while Semenov was at large.

Roman Storm appeared in court

Later, despite an appeal that recognized OFAC’s sanctions as unauthorized and invalid, Storm still faced charges last July. After Judge Katherine Polk Failla’s review, the jury found Storm guilty of “knowingly operating an unlicensed money transmitting business,” but no sentence has been officially handed down yet.

Under Brian Nistler’s celebratory tweet about Uniswap’s victory, Sigil developer tim-clancy.eth pointed out that Failla’s rulings before and after are contradictory (the verdict against Storm was made by the jury), earning the most likes among all comments.

Decentralization is possible, but privacy is not

I am not a professional lawyer, but from a simple emotional perspective, I can understand why Uniswap and Tornado Cash have different outcomes.

The core reason is that Tornado Cash’s developers should have known that mixers would inevitably be used for money laundering. This clearly reveals the regulatory stance: decentralization is acceptable, but transparency is mandatory. Tether faced a similar dilemma and later cooperated with money laundering investigations, adding freezing features.

Perhaps Roman Storm, behind bars, might feel the verdict is unfair, but he should realize that even in the pro-crypto U.S. under Trump, platforms aiding North Korean hackers in money laundering are not tolerated. Today’s crypto power is still insufficient to challenge state authority.

Web3 practitioners have shown support for Tornado Cash’s developers and cheered for Uniswap’s victory. Because, in our view, the two protocols are not fundamentally different, and Tornado Cash even offers better privacy protection. When Uniswap added a front-end block for sanctioned addresses in 2022, it sparked some controversy. Now, under current legal frameworks, permissionless operation might be the only way for decentralized protocols to survive.

But let’s be honest: does Uniswap really bear no responsibility in these scam events?

Strict logic, as the judge’s analogy suggests, is like saying that just because a bank robber drives a Mercedes-Benz to rob a bank, Mercedes should bear the loss. But on a business level, we tend to believe that industry giants should provide protections within their capacity. Today’s security tools can identify many potential scam projects in advance. For established projects benefiting from Web3’s growth, simple screening is not difficult.

Protecting investors is not an obligatory duty, but it is a responsibility that ordinary investors hope Uniswap will actively assume.