On April 10, 2024, the US Securities and Exchange Commission (SEC) warned the decentralized exchange Uniswap of possible legal action. This was announced by its founder and CEO Hayden Adams.
According to him, the message came in the form of a so-called “Wells notice.” This is an SEC document warning the company that a lawsuit may be filed. Typically, the regulator sends it before filing a formal claim or gives a final opportunity to refute the allegations.
"I am not surprised. Just annoyed, frustrated and ready to fight. I am confident that the products we offer are legal. Instead of working to create clear and reasonable rules, the SEC decided to focus on charging long-time players such as Uniswap and Coinbase. I believe that freedom is worth fighting for. I think the DeFi sector is worth fighting for,” Adams wrote.
Uniswap management did not disclose the exact contents of the “Wells notice.” However, in a blog post, the team stated that the UNI token is not a security.
Based on recent SEC lawsuits against Coinbase, Binance, and other trading platforms, it appears the agency is looking to charge Uniswap with illegally selling securities or failing to register as a broker or exchange in the United States.
Bill Hughes, Senior Legal Advisor and Director of Regulatory Affairs at Consensys, commented on the situation:
He explained that the SEC must first obtain approval of the lawsuit from five commissioners, including its chairman Gary Gensler.
“Now we all know that the chairman wants to sue them. Two members of the commission will agree with him, and two will not, so the lawsuit is a foregone conclusion. However, it will take time to see real claims,” Hughes said.
The lawyer denied the idea that the SEC could prosecute Uniswap (UNI) token holders, platform managers or other community members. According to him, even during the trial, Uniswap will continue to operate and will not suffer.
According to Lookonchain, three large coin holders moved 2.03 million UNI worth approximately $20 million to centralized exchanges following the news. The UNI token rate dropped by 17%.
At that moment, the asset rate fell below $9.1, although the day before it was trading at $11.6. At the time of writing, the UNI price is $9.36, according to TradingView.
At the end of March 2024, Gary Gensler stated that the crypto market needed “further disinfection.” That same month, the agency asked Congress to allocate an additional $158 million from the federal budget to regulate the crypto market.
