Uniswap, a renowned decentralised cryptocurrency exchange, found itself in the crosshairs of the US Securities and Exchange Commission (SEC) recently, causing a stir in the cryptocurrency sector.
Uniswap revealed on Wednesday that the SEC intended to take legal action against it. The news led to a 9.5% fall in Uniswap's native token, UNI. Uniswap CEO Hayden Adams confirmed receipt of the 'Wells Notice' and expressed his disappointment and willingness to fight back.
I am confident that the products we offer are legal and that our work is on the right side of history.
The term "Wells notice" is used to describe a preliminary warning informing the recipient of the charges that the regulatory authority may bring against him or her. These notices often come before enforcement action. When Uniswap received such a notice, it raised eyebrows across the cryptocurrency sector.
Mary-Catherine Lader, Uniswap's chief operating officer, and Marvin Ammori, chief legal officer, revealed that the content of Wells' notice focused primarily on Uniswap's alleged activities as an unregistered broker-dealer and exchange. It remains unclear whether Uniswap's native token, UNI, is implicated as a potential security in the SEC notice.
Ammori stressed that he believes Uniswap does not meet the SEC's current definition of an exchange, referring to a recent SEC decision in the Coinbase case, where a judge ruled that Coinbase Wallet was not a broker.
Uniswap's Response to the Notice
Mr Adams voiced his disappointment with the SEC's apparent focus on protecting opaque systems rather than consumers. He announced that Uniswap was ready to fight the charges, even if the battle had to go to the Supreme Court.
I think freedom is worth fighting for. I think DeFi is worth fighting for.
Today @Uniswap Labs received a Wells notice from the SEC.
I’m not surprised. Just annoyed, disappointed, and ready to fight.
I am confident that the products we offer are legal and that our work is on the right side of history. But it’s been clear for a while that rather than…
— hayden.eth 🦄 (@haydenzadams) April 10, 2024
Uniswap hinted that Wells' opinion and the SEC's lawsuits against Coinbase and other cryptocurrency companies indicated a political agenda to target even the most reputable blockchain technology organisations.
Furthermore, the company refuted the SEC's assertion that the tokens it offers for sale are securities. According to Uniswap, tokens are digital file formats capable of storing different types of value and are not inherently securities.
"The overwhelming majority of tokens traded are definitely not securities - they are stablecoins, community and utility tokens, and commodities like Ethereum and Bitcoin." Uniswap.
Uniswap made the case for the SEC not being empowered by Congress to oversee cryptocurrency markets. Specifically, they quoted testimony from SEC Chairman Gary Gensler, who told Congress that new legislation should be passed to give the agency the powers it needs to effectively regulate the industry.