Decentralized cryptocurrency exchange Uniswap has received a notice of intent to take enforcement action from the U.S. Securities and Exchange Commission (SEC), the company said on Wednesday.
Uniswap's native token, UNI, fell 9.5% immediately after the news.
Uniswap CEO Hayden Adams announced that he had received the so-called Wells notice regarding X, saying he was not surprised and was “just frustrated, disappointed and ready to fight.”
Wells notices are advance warnings that notify respondents of charges that regulators are considering. These usually lead to enforcement.
At a press conference Wednesday afternoon, Uniswap Chief Operating Officer Mary Katherine Rader and Chief Legal Officer Marvin Anmoli told reporters that the Wells notice indicates that Uniswap is an unregistered security. It said it is focused on operating as a broker and unregistered stock exchange. It remains unclear whether Uniswap's native token, UNI, is implicated as a potential security in the SEC notification.
Anmoli said he believes Uniswap does not meet the SEC's current definition of an exchange. He also pointed to the recent ruling in the SEC's case against Coinbase (where the judge said Coinbase Wallet is not a broker) as a good sign of Uniswap's ability to defeat the SEC on the same charges (the judge said issued similar rulings in other SEC cases (Claims against Coinbase may move forward).
“We are confident that the products we offer are legal and that our work is on the right side of history,” Adams wrote. “However, the SEC's decision to focus on attacking long-standing good actors like Uniswap and Coinbase, rather than working on creating clear and informed rules, is a sign that On the other hand, we are overlooking bad actors like FTX.”
Adams said Uniswap will contest the charges.
“I am frustrated that the SEC appears to be more concerned with protecting opaque systems than protecting consumers. And I believe we will have to fight U.S. government agencies to protect our company and our industry.” ” Adams wrote. “This battle will take years, potentially go all the way to the Supreme Court, and the future of financial technology and our industry is at risk. We can win if we stand together. Freely.” I think it’s worth fighting for. I think DeFi is worth fighting for.”
An SEC spokesperson said the agency “does not comment on the possibility of an investigation.”
in Wednesday's blog post, Uniswap said the Wells notice and the SEC's lawsuit against Coinbase and other crypto companies make their actions against Uniswap “the latest political move to target even the best actors building technology on the blockchain.” “This shows that this is nothing more than an effort,” he wrote.
Despite the SEC's position that most non-Bitcoin tokens fall under its jurisdiction, Uniswap denies that the tokens it sells are securities.
“In reality, tokens are digital file formats like PDFs or spreadsheets that can store many different types of value. They are inherently securities, just as all paper is not a stock certificate. Not,” the blog post reads. “The overwhelming amount of token trading is clearly not securities. They are stablecoins, community tokens, utility tokens, and commodities like Ethereum and Bitcoin.”
The blog post added that “the SEC has refused to create a path for companies to register” if the tokens could actually be securities.
Uniswap did not comment further on the matter other than to direct CoinDesk to Adams' social media posts and the company's blog post.
Uniswap asserts that the SEC has “no authority from Congress” to oversee the crypto market, citing SEC Chairman Gary Gensler's past testimony before Congress to effectively regulate the crypto industry. He said new legislation would need to be passed to give the SEC the authority it needs to regulate. Gensler has since argued that existing securities laws are sufficient for regulators to police cryptocurrencies.
Efforts to pass a comprehensive regulatory framework for the cryptocurrency industry have stalled and are likely to remain stalled heading into the next presidential election.
Update 1 (April 10, 2024 19:12 UTC): Updated to include additional information about Uniswap's blog post.
Update 2 (April 10, 2024 19:56 UTC): Updated to include Uniswap's comments at the press conference.
