DeFi protocol Uniswap received a Wells Notice in which the U.S. Securities and Exchange Commission (SEC) accused the platform of law violation. The DEX’s lawyers called the regulator’s actions an abuse of power and expressed their readiness to counter the SEC’s attacks.
Marvin Ammori, Chief Legal Officer at Uniswap Labs, said that the U.S. regulator threatened the DeFi protocol regarding the platform’s operations.
According to Ammori, the protocol’s lawyers were prepared for such a development after the regulator repeatedly tried to prove its authority to regulate crypto exchanges through the courts. Therefore, the Wells Notice wasn’t a surprise.
Its exact wording wasn’t published, but Uniswap’s blog indicates that the regulator has a beef with UNI, the platform’s native token. The SEC likely labeled it as a security, and by extension, the DEX was also named a securities issuer or broker operating in the United States.
Ammori said that the SEC must have the authority to regulate decentralized products. Otherwise, the crypto exchange would receive a lawsuit or a notice from the regulator to register the products much sooner. According to the legal counsel, The regulator’s previous attempts to prove that tokens traded on secondary markets like Uniswap are investment contracts failed, as did attempts to prove that a crypto storage app can act as a securities broker. Therefore, the SEC’s attempt to apply a similar approach to the DeFi protocol can’t succeed.
According to Hayden Adams, Founder and CEO of Uniswap Labs, the company plans to resist the regulator’s attacks no matter what. He believes the legal battle could last more than a year and reach the Supreme Court, but if that’s the price of protecting the industry and the entire DeFi ecosystem, the company’s willing to take the fight to government agencies. “Freedom is worth fighting for,” Adams wrote.
The crypto community is divided on how to proceed. For example, Gabriel Shapiro, ex-General Counsel of Delphi Labs, expressed the opinion that the SEC will be able to prove in court that UNI is a security but will lose if the agency calls Uniswap a securities exchange. Most community members, however, are extremely disappointed with the regulator’s actions and confident that Uniswap would be able to withstand the SEC’s attacks.
Despite the optimism, UNI fell by more than 16% in the last 24 hours. According to CoinGecko, as of 13:30 (GMT+2), April 11, the asset’s price is $9.23 and continues to go down.
The SEC accused centralized crypto exchanges such as Binance, Coinbase, Bittrex, Kraken, and KuCoin of violating U.S. laws.
