The U.S. Securities and Exchange Commission (SEC) has issued a warning to Uniswap Labs, the developer of the largest decentralized exchange platform on Ethereum, regarding possible legal action. The news sent shockwaves through the crypto world, sending the price of UNI, the platform’s token, plummeting.
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Uniswap warned of lawsuit by SEC
On Wednesday April 10, the SEC notified Uniswap Labs its intention to take coercive action against it, considering that the platform operated as an unregistered securities broker and platform. This opinion, known as the Wells notice serves as a preliminary wake-up call, indicating that the regulator is seriously considering filing a complaint against the target company.
SEC Chairman, Gary Gensler has expressed doubts about the true decentralization of DEXs for a long time, claiming that they fall within the remit of his institution. The accusations made against Uniswap are in line with the procedures initiated by the SEC last year against centralized platforms, in particular Coinbase Global Inc and Binance.
Marvin Ammori, legal director ofUniswap emphasized at a conference call with Bloomberg that the SEC suggests that the majority of tokens would be considered financial securities.
Decentralized exchanges, which account for more than 27% of total crypto transaction volume according to DeFi Llama, are structurally different from centralized platforms.
Uniswap ready to defend itself against SEC accusations
Facing the threat of legal action, Hayden Adams, Uniswap CEOexpressed his frustration and disappointment. Nevertheless, he said he was determined to challenge the SEC’s allegations, even if this battle is likely to drag on for several years.
I’m annoyed that the SEC seems more concerned with protecting opaque systems than consumers.
Statement by Hayden Adams
Marvin Ammori pointed to a precedent potentially favorable to Uniswap: a recent court decision in favor of Coinbase in a case against SEC. However, the precise details of the charges remain unclear at this stage. The legal team atUniswap is preparing to challenge any punitive action in court.
The announcement of this warning sent the UNI token price south by more than 10% in 24 hours; taking it below the $10 mark.
This action by the SEC is also part of a broader context of regulatory crackdowns against cryptocurrency players, as evidenced by the recent offensive against KuCoin for violation of anti-money laundering laws.
The battle between the SEC and DeFi players like Uniswap raises fundamental questions about the nature of digital assets and their regulation. While the SEC seeks to apply securities laws to cryptos, DeFi advocates argue that these assets are fundamentally different and require a tailored regulatory framework.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
