Uniswap (UNI) experienced a significant decline, reaching a six-week low, following an announcement that the decentralized exchange received a Wells notice from the Securities and Exchange Commission (SEC), signaling potential enforcement action. Despite the setback, Uniswap is determined to contest the threat in a legal battle.
The UNI token plummeted by 10% within an hour of Uniswap disclosing the receipt of the Wells notice, dropping from $11.21 to $10. Currently, UNI is trading at $9.06, its lowest level since late February, according to CoinGecko.
Hayden Adams, the founder of Uniswap Labs, expressed his resolve to fight the SEC’s proposed lawsuit, acknowledging that the battle could extend for years and possibly reach the Supreme Court.
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
While Uniswap did not reveal the specifics of the Wells notice, it asserted in a blog post that UNI does not meet the U.S. legal definitions of securities exchange or broker and emphasized that UNI is not a security.
The SEC refrained from commenting on the potential investigation.
Bill Hughes, Consensys senior counsel, explained that SEC staff must secure approval from the agency’s five commissioners, including Chair Gary Gensler, before initiating a lawsuit against Uniswap. Hughes reassured concerned parties that it was highly unlikely for the SEC to target UNI holders or protocol users.
Steady lads. I'm seeing signs of some getting a bit spooked and wondering if they might be in harms way in light of the news @Uniswap just dropped. a couple of things:
1) Uniswap was just informed that the SEC staff is going to recommend to the commission that they approve a…
— Bill Hughes : wchughes.eth 🦊 (@BillHughesDC) April 10, 2024
John Reed Stark, former SEC Internet Enforcement Chief, cautioned against responding aggressively to the Wells notice, advising that it could be counterproductive.
Gabriel Shapiro, former Delphi Labs general counsel, speculated that while the SEC might succeed on securities issues with UNI, it could face challenges if it alleges that Uniswap is a securities exchange.
my opinion–don't overthink the Uniswap case
probably SEC will win on securities issues with UNI and lose on Uniswap AMM being a securities exchange. . .
of course, we'll have to see all the facts & circumstances; I have no insider knowledge, just my hunch based on current…
— _gabrielShapir0 (@lex_node) April 10, 2024
Paul Grewal, chief legal officer of Coinbase, echoed Shapiro’s sentiment, citing a recent court ruling in Coinbase’s favor against the SEC’s claim of conducting brokerage activity through its decentralized Coinbase Wallet.
Sometimes you have to laugh or else you'll cry. Question: how can you square the @SECGov's claim that @Uniswap acts as a broker with the Court's ruling against the @SECGov just a handful of days ago? Answer: you can't. https://t.co/K42aKw5YZc pic.twitter.com/OcegMnDWVu
— paulgrewal.eth (@iampaulgrewal) April 10, 2024
As Uniswap gears up for a potential legal showdown with the SEC, the cryptocurrency community remains vigilant, anticipating the outcome of this high-stakes confrontation.
