Uniswap Labs recently responded to a Wells Notice from the SEC, arguing against a potential lawsuit and asking the agency to drop the matter. The SEC had raised concerns that Uniswap may be violating US securities laws, claiming that the platform operates as an unregistered securities exchange under Uniswap Labs’ control. Uniswap fired back, stating that the SEC’s legal assertions are weak and have been contradicted by court rulings. The company believes that the SEC is stretching the definitions of securities, exchanges, and contracts to an unreasonable extent and that the agency should not waste taxpayer money on this case.
Uniswap serves as a decentralized finance (DeFi) platform that caters to developers, traders, and liquidity providers. The SEC has labeled the Uniswap interface as an unregistered securities broker-dealer and the UNI token as an investment contract. Uniswap argued that most trading on its platform does not involve securities, noting that 65% of its trading volume involves assets that the SEC has admitted are not securities, such as Ether, wrapped Bitcoin, and stablecoins. The company also stated that US securities laws would not apply to the majority of users as it estimates 75% of them are located outside the US. Even if some security-like transactions occur on the platform, Uniswap claims it is not a securities exchange as it was not specifically built for those transactions.
The SEC has been actively sending Wells notices, filing lawsuits, and settling with various crypto companies. Its focus has shifted towards Ethereum and DeFi players, leading to legal action against companies like ShapeShift, TradeStation, Uniswap, Consensys, and an investigation into the Ethereum Foundation. Uniswap argued that the SEC’s accusations are baseless and that the agency is misapplying securities laws to the decentralized exchange and its users. The company believes that its work is historically significant and should not be the target of a costly legal case brought by the SEC.
Uniswap emphasized that the SEC’s allegations are unwarranted and that the majority of its users are not subject to US securities laws. The decentralized platform argued that even if a small percentage of transactions on its platform qualify as securities, it does not meet the criteria for being considered a securities exchange. Uniswap pointed out that trading on its platform primarily involves assets that are not classified as securities according to the SEC’s own standards. The company reiterated its confidence that its operations are compliant with the law and that it should not be the subject of legal action by the SEC.
Overall, Uniswap’s response to the SEC’s Wells Notice highlights its position that the agency’s allegations are unfounded and that its operations are in compliance with the law. The company contends that the SEC is misapplying securities laws to decentralized exchanges and that the majority of its users are not subject to US securities regulations. Uniswap believes that its platform is historically significant and should not be the target of a costly legal case brought by the SEC. The outcome of this conflict between Uniswap and the SEC could have broader implications for the regulation of decentralized finance platforms and the cryptocurrency industry as a whole.
