- Uniswap has received a Wells Notice from the SEC, signaling an escalation in the SEC-crypto conflict
- The notice marks the first SEC action against a decentralized exchange
- Uniswap has asserted confidence in its products’ legality amid ongoing regulatory battles.
Uniswap has said that it is “ready to fight” after the US Securities and Exchange Commission (SEC) sent the company a Wells Notice. The notice, which is typically a precursor to enforcement action, signifies an escalation in the battle between the SEC and the crypto space, representing the first time that the agency has gone after a decentralized exchange in this manner. Uniswap added that it remained confident that the products it offers are “on the right side of the law” as the crypto space gears up for another battle with its institutional overseers.
Cryptocurrencies are “Just a Digital File Format”
Uniswap revealed the serving of the Wells Notice on X, sounding a bullish note throughout the thread:
Today Uniswap Labs received a Wells notice from the SEC
And we’re ready to fight
This is the latest political effort to target even the best actors in crypto like Uniswap and Coinbase
All Uniswap products and the Uniswap Protocol are unaffectedhttps://t.co/i2p5LubELk
— Uniswap Labs 🦄 (@Uniswap) April 10, 2024
Across the five posts covering its point of view, the exchange, which launched in 2018, stated its belief that its products are “not just legal — they are transformative” and that the tokens it sells are not securities but are instead “just a digital file format.”
The company added that it can not be considered a securities exchange because it is operated by “a decentralized, autonomous set of smart contracts that run without any organization, individual, or entity behind them,” and it is this aspect that will be most closely watched by crypto advocates.
SEC Victory Would be Devastating
Uniswap has already used this argument to fend off a previous class-action suit, where it successfully argued that it merely provided a neutral tool, akin to a self-driving car, and was not responsible for users’ actions.
It is this new aspect, rather than the known attitudes of the SEC towards cryptocurrencies sold through exchanges, that will be the most decisive factor in this lawsuit; if the judge rules that decentralized exchanges do indeed have the same responsibilities as centralized exchanges, then this could have a significant impact on the crypto space, particularly given the rapid growth of the DeFi sector and its increasing interest from mainstream finance.
