DeFi
DeFi Exchange Uniswap (UNI) Receives Enforcement Notice from US SEC
Decentralized crypto exchange Uniswap has received notice from the United States Securities and Exchange Commission (SEC) indicating its intent to pursue enforcement action, the company revealed on Wednesday.
Uniswap’s native token, UNI, fell 9.5% immediately following the news.
Uniswap CEO Hayden Adams announced receipt of the so-called Wells review on X, saying he wasn’t surprised, “just annoyed, disappointed and ready to fight.”
Wells Notices are preliminary warnings that inform respondents of the charges the regulator plans to bring against them. They generally give rise to coercive measures.
At a press conference Wednesday afternoon, Mary-Catherine Lader, Uniswap’s chief operating officer, and Marvin Ammori, chief legal officer, told reporters that the content of Wells’ opinion focused on the fact that ‘Uniswap was operating as an unregistered securities broker and unregistered stock exchange. It remains unclear whether Uniswap’s native token, UNI, was implicated as a potential security in the SEC notice.
Ammori said he believes Uniswap does not meet the SEC’s current definition of an exchange. He also pointed to a recent ruling in the SEC case against Coinbase – in which a judge ruled that Coinbase Wallet was not a broker – as a good sign of Uniswap’s ability to beat the SEC on the same charges (the judge ruled that the other allegations against Coinbase could move forward).
“I am confident that the products we offer are legal and that our work is on the right side of history,” Adams wrote. “But it has been clear for some time that instead of working to create clear and informed rules, the SEC has decided to focus on attacking long-standing good players like Uniswap and Coinbase. bad actors like FTX.”
Adams said Uniswap would fight the accusations.
“I am frustrated that the SEC seems more concerned with protecting opaque systems than protecting consumers. And that we will have to fight a US government agency to protect our business and our industry,” Adams wrote. “This fight will take years, could go all the way to the Supreme Court, and the future of fintech and our industry hangs in the balance. If we are united, we can win.” I think freedom is worth fighting for. I think DeFi is worth fighting for.
An SEC spokesperson said the agency “does not comment on the existence or non-existence of a potential investigation.”
In a Wednesday blog post, Uniswap wrote that Wells’ notice, along with lawsuits filed by the SEC against Coinbase and other crypto companies, indicate that their action against Uniswap is just “the latest political effort to target even top players who build technologies on blockchains.
Uniswap denies that the tokens it offers for sale are securities, despite the SEC’s position that most tokens, except bitcoin, fall under their jurisdiction.
“The reality is that tokens are a digital file format, like a PDF or spreadsheet, and can store many types of value. They are not inherently securities, just as each sheet of paper is not a stock certificate,” the blog states. “The huge volume of tokens traded are definitely not securities – they are stablecoins, community and utility tokens, as well as commodities like Ethereum and Bitcoin. »
The blog post adds that, in cases where a token may actually be a security, “the SEC has declined to create a way for companies to register.”
Uniswap did not comment further on the matter, only directing CoinDesk to Adams’ post on social media and the company’s blog.
Uniswap argued that the SEC has “no authority from Congress” to oversee crypto markets, citing SEC Chairman Gary Gensler’s previous testimony before Congress that a new law should be adopted to give the agency the necessary powers to effectively regulate the sector. Gensler has since argued that existing securities laws are sufficient for the regulator to control crypto.
Efforts to adopt a comprehensive regulatory framework for the crypto industry have stalled and will likely remain stagnant ahead of the next presidential election.
UPDATE 1 (April 10, 2024 at 7:12 p.m. UTC): Updated to include additional information from the Uniswap blog post.
UPDATE 2 (April 10, 2024 at 7:56 p.m. UTC): Updated to include comments from Uniswap during a press conference.