Following the issuance of a Wells notice by the US Securities and Exchange Commission (SEC) to Uniswap Labs, the entity behind the Uniswap decentralized exchange, trading activity on the platform experienced a significant dip of almost 10% in just one day. Data from DeFillama revealed that Uniswap had facilitated trades amounting to $2.7 billion across various blockchain networks, such as Ethereum, Arbitrum, Coinbase-backed Base, and others. The majority of this decline was observed on Uniswap V3, which is the most widely used version of the decentralized trading platform.
Token Impact
The news of the SEC’s action had a notable impact on the exchange’s native UNI token, causing it to plummet to a multi-week low of $9.09, according to data from CryptoSlate. Further exacerbating the situation, blockchain sleuth Lookonchain reported that three whales had dumped a total of 2.03 million UNI, equivalent to $20 million, on centralized exchanges following the announcement.
In response to the SEC’s allegations, Mavin Ammori, the Chief Legal Officer at Uniswap Labs, expressed the company’s preparedness to address any potential lawsuit initiated by the regulatory body. Ammori highlighted the perceived weaknesses in the SEC’s claims, asserting that the jurisdiction of the financial regulator is limited to securities and does not extend to assets characterized by specific file formats or technical standards. He emphasized that tokens like Bitcoin, ETH, stablecoins, and meme coins do not fall under the category of securities. Ammori also pointed out that the Uniswap Protocol, web app, and wallet do not meet the legal definitions of securities exchange or broker, citing a recent case where a judge dismissed the claim that crypto wallets were considered brokers even when dealing with securities.
Despite the challenges posed by the SEC’s actions, Uniswap Labs remains a proponent of sensible regulations within the cryptocurrency industry. The company advocates for a clear rule of law rather than arbitrary enforcement and the misuse of power by regulatory authorities. By advocating for a balanced approach to regulation, Uniswap Labs seeks to foster a regulatory environment that promotes innovation while ensuring investor protection in the rapidly evolving crypto landscape.