Uniswap’s UNI token experienced a sharp decline after news emerged that the decentralized exchange was being targeted by the United States Securities and Exchange Commission.
$UNI, which was trading above $11 on April 10 2024, has declined to $9.10 at the time of writing, losing more than 6% in the last 24 hours, according to CoinGecko.
With a market capitalization of $7.6 billion, the token ranks as the 20th largest cryptocurrency by market cap with UniSwap being the biggest decentralized exchange with a 24-hour trading volume of $1.4 billion, according to CoinGecko.
The United States Securities and Exchange Commission (SEC) issued a Wells notice to the decentralized exchange on April 10 2024 signalling potential regulatory action or investigation.
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
A Wells notice typically provides recipients with an opportunity to respond to the SEC’s allegations before any formal charges are filed. It serves as a warning that the SEC is considering legal action and allows the recipient to present their arguments or defences to the allegations.
The SEC has pursued various crypto companies on allegations of selling unregistered securities, including ongoing investigations into Uniswap spanning several years. However, according to Marvin Ammori, the company’s chief legal officer, its enforcement actions have been inconsistent.
1/ Today’s Wells notice against @Uniswap is disappointing, but is not unexpected from this SEC
It’s another abuse of power – unsurprising from an SEC that:
Last month, a federal judge ruled committed a "gross abuse of power" by lying in court about a crypto project
— Marvin Ammori (@ammori) April 10, 2024
According to local reports, Ammori said that the Wells notice was focused on Uniswap acting as an unregistered securities broker and unregistered securities exchange. It remains unclear whether the UNI token was implicated as a potential security in the SEC’s notice.
“The Uniswap Protocol, web app, and wallet don’t meet the legal definitions of securities exchange or broker,” said Ammori, adding that the protocol welcomes “regulations for crypto – and clear rule of law that we expect in the US – not arbitrary enforcement and continued abuse of power.”
The SEC has issued similar notices in the past, warning about legal actions against crypto exchanges Coinbase and Binance. Both exchanges received lawsuits in June 2023.
US Regulator Sues Coinbase for Allegedly Violating Securities Regulations
The lawsuit filed against Coinbase claims that the company has been functioning as an unregistered security broker starting from 2019, which is approximately two years prior to its initial public offering… pic.twitter.com/niEaQgj4UP
— BitKE (@BitcoinKE) June 8, 2023
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