Decentralized exchange Uniswap has responded to the U.S. Securities and Exchange Commission’s (SEC) Wells Notice, urging the commission to reconsider its stance and remain within constitutional boundaries. The SEC had expressed plans to sue Uniswap Labs for allegedly operating an unregistered securities broker and exchange through its Ethereum-based automated market-making (AMM) protocol and wallet product.
Uniswap’s Legal Challenge
In a robust reply, Uniswap called on the SEC to reassess its assertions made in last month’s Wells Notice. The exchange argued against the agency’s legal justification and the classification of certain DeFi instruments. According to Uniswap CLO Marvin Ammori, SEC Chair Gary Gensler’s team operates under the “false assumption that just about ‘all’ tokens are securities (which the SEC then refuses to register).”
Ammori likened tokens to file formats like PDFs and JPEGs, representing value. He argued that these tokens predominantly represent commodities like Bitcoin (BTC), Ether (ETH), and stablecoins like Tether (USDT). About 65% of the platform’s trading volume exists across these three assets, which Uniswap maintains fully comply with U.S. law.
Jurisdictional Overreach
Uniswap further argued that the SEC’s intended litigation was an overreach of its powers conferred by Congress. With an estimated 75% of usage outside the U.S., over 90% of Uniswap’s volume may be beyond SEC jurisdiction. Ammori emphasized that the agency would need to redefine what qualifies as a securities exchange even if the Ethereum protocol supposedly facilitated securities trading.
“Our case is so strong that the SEC is trying to change the law to fight us,” Uniswap stated in its response to the crypto community.
Historical Context and Readiness to Fight
Uniswap’s lawyer highlighted that the SEC reused dismantled arguments from previous cases against companies like Ripple and Coinbase. A Federal judge also reprimanded the commission for abusing its remit in the DEBT Box, indicating a lack of good faith when dealing with crypto, according to Ammori.
The blockchain company stressed its readiness to fight the SEC and expects to claim victory against America’s premier securities law enforcer. “If the SEC brought a case, it would lose, and lose in ways that undermine any future authority over DeFi, crypto, and future tech,” Marvin Ammori asserted.
Uniswap’s firm stance against the SEC highlights a significant legal confrontation in the evolving landscape of decentralized finance and cryptocurrency regulation. The outcome of this dispute could have far-reaching implications for the future of DeFi and digital assets.
