Are DeFi devs liable for the illegal activity of others on their platforms?

A US federal judge has dismissed a class action lawsuit that sought to hold Uniswap Labs and its founder Hayden Adams liable for scam tokens traded on the decentralized exchange (DEX). 

Federal Judge Katherine Polk Failla ruled that the DEX cannot be held responsible for the actions of third-party token issuers.

But that’s not the only court case or jurisdiction with implications for smart contract developers.

Joshua Chu, co-chair of the Hong Kong Web3 Association, argues that the Uniswap ruling highlights a deeper tension between how US courts view decentralized finance (DeFi) infrastructure and how global standards expect platforms to manage illicit finance risks.

In an interview with Cointelegraph Magazine, Chu discussed the implications of the Uniswap decision, how it compares with the prosecution of Tornado Cash developer Roman Storm, and why developers won’t always be beyond the reach of standards set by intergovernmental bodies like the Financial Action Task Force (FATF).

This conversation has been edited for clarity and length.

Magazine: How should we interpret the Uniswap ruling in the broader legal debate over developer liability versus decentralized protocols?

Chu: I’ve had a hard time accepting the idea that Uniswap is really a neutral bystander. We have research showing that a significant portion of listed tokens on DEXes have exhibited rug pull patterns that mature analytics tools can automatically detect. These tools can score their risk and trigger front-end warnings.

For example, we see on blockchain scanners that certain wallets are earmarked as looking like wallets associated with risks. It is easy for developers to implement many of these safeguards without affecting the underlying smart contracts.

At the end of the day, it comes down to choice. Given that this is a sophisticated team that collects fees, the decision not to deploy these defenses for users begins to look less like neutral infrastructure and more like deliberate design that externalizes fraud risk to retail users.

Let’s face it, trading volume is how these infrastructures make a living or gain prominence.

[Editor’s note, March 23: Uniswap launched a token warning feature in December 2024 via Blockaid and removed front-end fees in December 2025.

March 25: A Uniswap spokesperson told Magazine, “We’ll let Judge Failla’s ruling speak for itself: ‘Such an argument fails for the same reasons why a bank does not substantially assist a money launderer who washes his cash through the bank’s accounts … Simply providing the platform on which a fraud takes place is not the same as substantially assisting that fraud.’”]

Magazine: How does DeFi as neutral infrastructure square with international DeFi expectations?

Chu: One of the clear divergences we see here is the court’s position that DeFi is neutral infrastructure versus the stance FATF has taken. If you look at FATF statements — as well as regulators that follow FATF standards — it is the opposite of this ruling.

The judgment is not saying the FATF position is wrong. It just seems the judge did not engage with FATF guidance when it comes to certain illicit activities. Because of that, the way this ruling is interpreted could put the US in an awkward position internationally.

Magazine: What does the Uniswap ruling and the Tornado Cash prosecution tell us about how courts and regulators may evaluate developer responsibility in DeFi?

Chu: In Tornado Cash, just like with any decentralized platform, you are not purely dealing with code. There is also the foreseeability-of-harm factor. As we covered earlier, there are features that are readily available that you can plug in. I think it just comes down to the judge taking very different findings on the matter. The Tornado Cash decision aligns more with international standards.

For example, Uniswap could have substantially reduced harm by implementing the defenses I mentioned, which would be in line with FATF expectations on user-facing controls. But they were not doing it. So there are quite a few things that give a very divergent signal.

Magazine: If a DeFi platform’s front end provides access to scam tokens, does…