Decentralized cryptocurrency exchange Uniswap has received notice from the US Securities and Exchange Commission (SEC) that it intends to take enforcement action, the company revealed on Wednesday.
Uniswap's native token, UNI, fell 9.5% immediately after the news.
Uniswap CEO Hayden Adams announced the receipt of the so-called Wells Notice regarding X, saying he was not surprised, “just upset, disappointed and ready to fight.”
Well Notices are preliminary warnings that inform respondents of the charges the regulatory body is considering bringing against them. They usually lead to enforcement actions.
In a press conference Wednesday afternoon, Uniswap COO Mary Katherine Lader and Legal Director Marvin Ammori told reporters that the content of the Wells notice focused on Uniswap's operation as an unregistered securities broker and an unregistered securities exchange. It remains unclear whether Uniswap's native token, UNI, is implicated as a potential security in the SEC notice.
Amore said he believes Uniswap does not meet the current definition of an exchange set by the Securities and Exchange Commission. He also pointed to the recent ruling in the SEC case against Coinbase — where the judge said 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 other companies affiliated with the SEC allege Against Coinbase can move forward).
“I am confident that the products we offer are legal and that our business is on the right side of history,” Adams wrote. “But it has been clear for some time that instead of working to create clear, informed rules, the SEC decided to focus on attacking good long-term actors like Uniswap and Coinbase. All while letting bad actors like FTX slip through.”
Adams said Uniswap will fight the accusations.
“I'm frustrated that the SEC seems more concerned with protecting opaque regulations than protecting consumers. We will have to fight a US government agency to protect our company and our industry,” Adams wrote. “This fight will take years, and could reach the Supreme Court, and the future of fintech and our industry is at stake. If we stand together we can win. I believe freedom is worth fighting for. I think DeFi is worth fighting for.
An SEC spokesman said the agency “does not comment on the presence or absence of a potential investigation.”
in Wednesday post, Uniswap wrote that Wells' notice, in addition to the SEC's lawsuits against Coinbase and other cryptocurrency companies, indicates that its action against Uniswap is just “the latest political effort to target even the best actors building technology on the blockchain.”
Uniswap denies that the cryptocurrencies it offers for sale are securities, despite the SEC's position that most cryptocurrencies besides bitcoin fall under its jurisdiction.
“The reality is that tokens are a digital file format, like a PDF or a spreadsheet, and can store many types of value. They are not inherently securities, just as every paper is not a stock certificate.” “The huge volume of tokens in circulation are definitely not securities – they are stablecoins, community tokens, utility tokens, and commodities like Ethereum and Bitcoin.”
In cases where a token may actually serve as a security, “the SEC has declined to create a path for companies to register,” the blog post added.
Uniswap did not comment further on the matter, other than directing CoinDesk to Adams' social media post and the company's blog post.
Uniswap claimed that the SEC “does not have congressional authority” to oversee cryptocurrency markets, citing SEC Chairman Gary Gensler's previous testimony before Congress that a new law should be passed to give the agency the necessary powers to effectively regulate the industry, though . Gensler has since argued that current securities laws are sufficient for a regulator to monitor cryptocurrencies.
Efforts to pass a comprehensive regulatory framework for the cryptocurrency industry have faltered, and will likely remain stagnant before the next presidential election.
Update 1 (10 April 2024 at 19:12 UTC): Updated to include additional information about the Uniswap blog post.
Update 2 (10 April 2024 at 19:56 UTC): Updated to include Uniswap's comments from a press conference.
