Uniswap Labs recently responded to the SEC’s Wells Notice in a 40-page document, arguing against a potential lawsuit and urging the SEC to drop the matter. The agency had raised concerns that Uniswap’s operations might violate US securities laws. Uniswap serves as a decentralized finance platform catering to developers, traders, and liquidity providers. The SEC claimed that Uniswap Protocol operates as an unregistered securities exchange under Uniswap Labs’ control and labeled the UNI token as an investment contract. Uniswap argued that the SEC’s legal assertions are weak and are stretching the definitions of securities, exchanges, and contracts to an unreasonable point.
Uniswap stated that the SEC should not devote taxpayer-funded resources to bringing a case against them, as they are confident that their work is on the right side of history. The platform argued that most trading on its platform does not involve securities, with 65% of its trading volume involving assets that the SEC has admitted are not securities. Additionally, Uniswap claimed that US securities laws would not apply to most users, as 75% of them are from outside the US. Even if a few security-like transactions took place on the platform, Uniswap argued that it is not a securities exchange since it was not built specifically for those transactions.
The SEC has been aggressive in sending Wells notices, filing lawsuits, and settling with numerous crypto companies. Its focus is shifting towards Ethereum and DeFi players, with companies like ShapeShift, TradeStation, Uniswap, and Consensys facing legal action. The Ethereum Foundation is also reportedly under investigation. Uniswap argued that the SEC’s accusations hinge on the idea that any value stored in a digital format can be considered a security. The platform urged the agency to reconsider its position and drop the matter.
Uniswap claimed that the SEC’s legal assertions are weak and have been contradicted by court rulings. The platform argued that the agency is stretching the definitions of securities, exchanges, and contracts to an unreasonable point. It also stated that most trading on its platform does not involve securities, even by the SEC’s own standards. Uniswap pointed out that the majority of its trading volume involves assets that the SEC has admitted are not securities, such as Ether, wrapped Bitcoin, and stablecoins. Additionally, Uniswap estimated that 75% of its users are from outside the US, further reinforcing its claim that US securities laws would not apply to most users.
Uniswap emphasized that even if a few security-like transactions took place on its platform, it should not be considered a securities exchange. The platform argued that a court would not see it that way because the platform was not specifically built for those transactions. Uniswap expressed confidence that their work is on the right side of history and urged the SEC to drop the matter. The platform believes that the SEC should not waste taxpayer money on pursuing a case against them when their operations are in compliance with the law. Uniswap’s response to the SEC’s Wells Notice is a part of the ongoing legal battle between regulators and decentralized finance platforms in the cryptocurrency industry.
