Uniswap Labs, the creator of the Uniswap decentralized exchange, has responded to the United States Securities and Exchange Commission (SEC) after receiving a Wells notice, which suggests a potential enforcement action. In a blog post on May 21, Uniswap criticized the SEC’s legal arguments in issuing the notice and expressed readiness to fight the matter in court. The company highlighted the success of its lawyers in representing other firms, such as Grayscale and Ripple, against the SEC. Uniswap’s Chief Legal Officer, Marvin Ammori, stated that the SEC’s case was weak and incorrect because it treated all tokens as securities. Uniswap emphasized that the SEC should not use taxpayer-funded resources to pursue a case against them but assured its preparedness for a legal battle if necessary.
Uniswap’s response came at a timely moment when the U.S. House of Representatives was about to vote on the Financial Innovation and Technology for the 21st Century Act, a bill that could potentially change the regulatory framework for crypto overseen by the SEC and the Commodity Futures Trading Commission (CFTC). Uniswap hinted that if the legislation becomes law, the SEC’s case might become irrelevant as the CFTC would gain authority to initiate specific enforcement actions.
Several Wells notices issued by the SEC to crypto companies have resulted in lawsuits, including one against Coinbase in March 2023. The commission has also indicated its intention to file enforcement actions against Robinhood, a trading platform, in May. Ammori argued that if the SEC were to bring a case against Uniswap, it would ultimately lose and undermine its future authority over decentralized finance (DeFi), crypto, and other emerging technologies. He likened the potential lawsuit to early regulations that hindered innovation on the internet.
The specific reasons behind the SEC’s enforcement action are unclear, but there have been reports suggesting that the regulator is contemplating categorizing Ether (ETH) as a security. Uniswap facilitates automated token exchanges on the Ethereum blockchain. By May 23, the SEC is expected to approve or reject applications for spot Ether exchange-traded funds (ETFs) to be listed and traded on U.S. exchanges.
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