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Uniswap has responded to the SEC’s Wells Notice, urging the commission to learn from past cases and remain within its constitutional boundaries.
Decentralized exchange Uniswap has called on the U.S. Securities and Exchange Commission to reassess its assertions made in last month’s Wells Notice, arguing against the agency’s legal justification and definition of certain DeFi instruments. In April, the regulator 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.
The Wells Notice is part of a broader crackdown on crypto operators, as the SEC under Chair Gary Gensler insists that most blockchain assets are securities, thus violating existing federal financial laws by failing to register.
Dispute over token classification
According to Uniswap CLO Marvin Ammori, Gensler and his team work operate 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, said Ammori, who maintained that the Uniswap protocol fully complies with U.S. law.
Today, @Uniswap has submitted our response to the SEC Wells notice we received in April.
— Marvin Ammori (@ammori) May 21, 2024
The Uniswap protocol represents an innovation in commerce that solves long-standing problems– with near-instant, intermediary-free, secure trading of any assets. It is the first widely used…
Uniswap further argued that the SEC’s intended litigation was an overreach of powers conferred on the agency by Congress. Uniswap said an estimated 75% of usage is outside the U.S., meaning over 90% of volume may be beyond SEC jurisdiction.
Ammori opined that the agency would also have 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.” the web3 company told the crypto community in a response.
Uniswap’s lawyer highlighted that the SEC reused dismantled arguments from previous cases against companies like Ripple and Coinbase for its illegal broker claims. A Federal judge also reprimanded the commission for abusing its remit in the DEBT Box, indicating the regulator’s lack of good faith when dealing with crypto, Ammori wrote.
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, Uniswap CLO