- In response to the Securities and Exchange Commission’s Wells notice against the company, Uniswap Labs provided feedback.
- According to the SEC, Uniswap DEX serves as both an unregistered securities exchange and an unregistered securities broker-dealer for Uniswap Labs.
- The executives of Uniswap Labs explained why the SEC’s criticism of the decentralized exchange is unfounded.
The creators of the decentralized exchange Uniswap, Uniswap Labs, replied to the Wells notice that the US Securities and Exchange Commission had filed against them.
Uniswap Labs stated in a release on Tuesday that the SEC claims that the DEX serves as both an unregistered securities exchange and an unlicensed securities broker-dealer, with UNI tokens serving as an investment contract.
In response, Uniswap Labs stated that it thought the House will approve a bill granting the Commodity Futures Trading Commission (CFTC) control over the trading of digital assets, adding that the SEC’s aggressive ideas aim to extend the regulator’s power outside its jurisdiction.
The regulator “should embrace open-source technology that improves outdated commercial and financial systems, instead of attempting to litigate it out of existence,” according to Uniswap Labs, which expressed similar views.
Uniswap wrote on Tuesday, “We’re confident that our work is on the right side of history.” It is not appropriate for the SEC to use funds provided by the taxpayers to pursue legal action against us.
“Weak and incorrect” reasoning
The executives of Uniswap Labs explained why a lot of the SEC’s allegations against the decentralized exchange are baseless.
The SEC’s reasoning falls short in analyzing the platform’s use of commodities and their actual nature, as the company’s Chief Legal Officer Marvin Ammori clarified on the social media platform X.
According to Ammori, the SEC is pursuing assets and individuals in countries far outside of its purview. The majority of trades on the protocol are for obvious commodities; ETH, WBTC, and stablecoins account for over 65% of all trades.
Usage is thought to be 75% foreign, excluding the US. Over 90% of the volume, based on these two techniques, is clearly outside the purview of the SEC. The SEC would therefore be making a case to, at most, focus on a very tiny portion of volume on a general-purpose technology—the dog’s tail waving.
Ammori continued, “The legal arguments against Uniswap are incorrect and feeble. The arguments put forth by the SEC are based on the erroneous premise that nearly all tokens are securities, a claim that the agency declines to acknowledge. However, a token is only a file type, much like a JPG or PDF.
Tokens can have any value, however they are most commonly used to represent commodities (like Bitcoin, Ethereum, and stablecoins), memes, and network access. Tokens are not intrinsically securities, nor are PDFs stock certificates.
Notice of Uniswap Wells
The SEC sent Uniswap Labs a Wells notice on April 10. A Wells notice notifies the addressee of impending legal action.
Others in the cryptocurrency space supported Uniswap, seeing the regulator’s action as a strike against the industry in general and decentralized finance in particular.
However, trading on the DEX continued unabated despite the Wells notification. Uniswap witnessed trading volume of about $3 trillion in the days following its receipt.
Based on volume, The Block’s Data Dashboard reveals that Uniswap is among the biggest decentralized exchanges. In April, it generated $71.45 billion in spot volume, or 56% of the overall volume for the month.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
