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

Author: Eric, Foresight News

At dawn on March 3, 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. Uniswap Foundation General Counsel Brian Nistler called it “a milestone ruling for DeFi.”

Hayden Adams also tweeted, “If you write open-source smart contract code and scammers use that code, the 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 case settled

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

In April 2022, Uniswap users represented by Nessa Risley filed a class-action lawsuit in court, accusing Paradigm, a16z, Uniswap, and its founder Hayden Adams of violating federal securities laws by issuing and selling unregistered securities—including UNI—via tokens on Uniswap. The plaintiffs 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 extraordinarily damaging to the crypto industry at the time, but surprisingly, the lawsuit quickly turned in Uniswap’s favor.

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 are listed or who can interact with it. “This case is more like holding the developers of autonomous vehicles responsible for third-party traffic violations or bank robberies involving the vehicle,” she said.

Accordingly, in August 2023, Failla dismissed the federal securities law claims. 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 not aware of the scam tokens, and even if it was, it 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 creators 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, effectively 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.

Storm appearing in court

Although the appeal later ruled that OFAC’s sanctions against Tornado Cash were unauthorized and invalid, Storm still faced charges last July. After Judge Katherine Polk Failla’s review, the jury found Storm “intentionally operated an unlicensed money transmitting business,” but he has not yet been formally sentenced.

Under Nistler’s celebration of Uniswap’s victory on Twitter, 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), which received 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 anti-money laundering investigations, adding freezing capabilities.

Perhaps Storm, behind bars, also feels 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 sympathize with Tornado Cash’s developers and cheer for Uniswap’s victory. In our view, the two protocols are not fundamentally different; Tornado Cash even offers better privacy. When Uniswap added front-end blocking of sanctioned addresses in 2022, it sparked some controversy. Now it seems that operating without permission within the current legal framework may 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 suggests, like the judge’s analogy, you can’t hold a Mercedes responsible for a bank robbery just because the thief drove one. But on a business level, we tend to believe that industry giants should provide some protection 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 ordinary investors hope Uniswap and others will take proactive responsibility.