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- Uniswap Labs rejected the SEC’s allegations that it operates as an unregistered securities exchange and that the UNI token functions as an investment contract.
- The company asserts that the Uniswap Protocol aligns with the SEC’s mission to protect investors and maintain fair, orderly, and efficient markets.
Uniswap Labs has hit out at the U.S. Securities and Exchange Commission over the issuance of the Wells Notice adding that the agency’s attempt to regulate the decentralized finance (DeFi) space is largely misguided and legally unsound.
In its blog post earlier this week on Monday, May 20, Uniswap Labs stated that it’s confident of emerging victorious if forced into liquidation by the U.S. SEC. “We’re confident that our work is on the right side of history. The SEC should not devote its taxpayer-funded resources to bringing a case against us,” it noted.
Uniswap Labs criticized the SEC’s attempts to broaden its authority over communications technology and digital markets. It argued that the agency’s legal arguments are weak and have been repeatedly rejected in court.
“We believe the SEC should embrace open-source technology that improves on outdated commercial and financial systems instead of attempting to litigate it out of existence,” the company noted.
Uniswap Labs further emphasized that the Uniswap Protocol aligns with the SEC’s mission to protect investors and maintain fair, orderly, and efficient markets, per the Crypto News Flash report.
Uniswap Labs also defended the Uniswap decentralized exchange (DEX) as a significant market innovation, enabling users to transact directly without centralized intermediaries. The protocol, which operates autonomously and has facilitated $2 trillion in trading volume without a single hack, offers transparent, low-cost, and efficient trading accessible globally 24/7.
Uniswap Debunks SEC Allegations of Unregistered Securities Exchange
In its detailed response against the Wells Notice, Uniswap also rejected the SEC’s allegations that the protocol operates as an unregistered securities exchange and the charges that the UNI token operates as an investment contract.
Uniswap also stated that it supports the ERC-20 token standard which is a “general file format for all forms of value”. “A token is a file format, like a PDF. The Protocol is a general purpose computer program that anyone can use and integrate, like TCP/IP,” it said.
Uniswap Labs asserted that even if the SEC is correct that some securities transactions occur on its protocol, it is “almost exclusively used for non-securities transactions” involving Ethereum, wrapped Bitcoin, stablecoins, and memecoins.
The SEC has argued that Uniswap operates as an exchange controlled by Uniswap Labs and that its interface functions as an unregistered broker-dealer. However, Uniswap Labs contends that the SEC’s position is based on incorrect assumptions and equates a digital file format with security.
The company emphasized that the UNI token was airdropped to thousands of users without the expectation of profit from the DEX’s performance, suggesting it does not meet the criteria required by the Howey Test.
Uniswap’s native UNI token is currently trading at $9.35 with a market cap of $5.5 billion. The UNI token price has seen a staggering 35% gain over the past seven days. This rally comes after Uniswap reported a strong surge in its wallets, per the Crypto News Flash report.
