UNI Drops 16% as SEC Targets Uniswap Labs

The U.S. Securities and Exchange Commission (SEC) has set its sights on yet another major player in the crypto industry – this time targeting a well-known name in decentralized finance (DeFi).

The regulator sent a Wells Notice to Uniswap Labs, the developer behind the widely used decentralized exchange (DEX) Uniswap, on Wednesday, informing the firm of an impending lawsuit. 

A Wells notice is a formal notification issued by the SEC that acts as a sort of precursor to an official lawsuit, notifying the receiving party that the intends to recommend enforcement action against them.

Uniswap’s native token UNI was down 16% over the last 24 hours, and was trading at around $9.32 at the time of writing.

Uniswap Labs CEO Hayden Adamas said he was disappointed, but not surprised by the SEC’s actions and was ready to fight the legal action in court.

Today @Uniswap Labs received a Wells notice from the SEC.

I’m not surprised. Just annoyed, 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’s been clear for a while that rather than…

— hayden.eth 🦄 (@haydenzadams) April 10, 2024

“I am confident that the products we offer are legal and that our work is on the right side of history,” said Adams.

“But it’s been clear for a while that rather than working to create clear, informed rules, the SEC has decided to focus on attacking long-time good actors like Uniswap and Coinbase. All while letting bad actors like FTX slip by.”

In an accompanying blog post, the Uniswap team said that it was prepared to fight for decentralized finance (DeFi), calling the SEC’s move “the latest political effort to target even the best actors building technology on blockchains.”

Although it was not immediately clear what the nature of the lawsuit would be, the language in the blog seems to indicate that it is similar to the enforcement the SEC brought against Coinbase. The SEC and Coinbase are in the midst of a legal battle, with the SEC alleging that Coinbase operated as an unlicensed securities exchange.

That lawsuit now looks to be heading towards trial, with the court rejecting Coinbase’s motion to dismiss the lawsuit, and the judge overseeing the proceedings agreeing that the SEC had brought sufficient evidence to classify some crypto assets names in the lawsuit as securities.

“In the circumstance where a token may represent a security, the SEC has refused to create a path for businesses to register,” said Uniswap.