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The Uniswap UNI token plummeted 16% after the decentralized exchange said it received notice of a proposed lawsuit from the US Securities and Exchange Commission (SEC).
The call well notice sent by the SEC shows that it has completed an investigation and intends to bring action against the exchange. No further details were provided, but Uniswap responded to the legal document in a blog post.
“Given the SEC’s ongoing lawsuits against Coinbase and others, as well as its complete unwillingness to provide clarity or a path to registration to those operating legally within the US, we can only conclude that this is the latest political effort to target even the best players building technology on blockchains,” he said. “We are confident that the products we offer are not only legal, but also transformative.”
He also argued that UNI is not a security and that Uniswap does not meet US legal definitions of being a securities exchange or broker.
UNI value fell to its lowest level in six weeks in just the first few hoursours after Uniswap revealed the planned action by the SEC.
Traders continued to panic when selling cryptocurrencies in the last 24 hours, with UNI trade at $9.38 at 2:50 a.m. EST after trading at around $11.21 before the announcement.
Uniswap team ‘ready to fight’ SEC
“I’m not surprised,” said Uniswap founder Hayden Adams in an April 10 X post. ““Just upset, disappointed and ready to fight.”
He anticipates that the legal battle “will take years,” as he prepares for it to “go all the way to the Supreme Court.”
Today @Uniswap Labs received a notice from Wells from the SEC.
I’m not surprised. Just upset, disappointed and ready to fight.
I am confident that the products we offer are legal and that our work is on the right side of history. But it has been clear for some time that instead of…
— hayden.eth 🦄 (@haydenzadams) April 10, 2024
Before the SEC can pursue the case, the regulator will first need to receive approval from its five commissioners. One of these commissioners is the chairman of the SEC. Gary Genslerwho has earned a reputation for his approach to regulation through enforcement in the crypto space.
SEC May Not Be Able to Argue Your Broker Claim
Gabriel Shapiro, former general counsel at Delphi Labs, said the SEC could win the argument that UNI is a security, but it might not emerge victorious in its claim that UniSwap is an exchange.
Sometimes you have to laugh or you will cry. Question: how can you square the @SECGovThe statement that @Uniswap acts as an intermediary with the Court’s ruling against the @SECGov Just a few days ago? Answer: you can’t. https://t.co/K42aKw5YZc pic.twitter.com/OcegMnDWVu
— paulgrewal.eth (@iampaulgrewal) April 10, 2024
Coinbase Chief Legal Officer Paul Grewal agreed with Shapiro. In his own post on X, he said that the SEC could not win its claim that Uniswap is a broker.
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