UNI Plummets 16% On SEC Lawsuit Plan As Uniswap Vows To Fight

Updated: 11 April 2024

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The Uniswap token UNI plummeted 16% after the decentralized exchange said it received notice of a proposed lawsuit from the U.S. Securities and Exchange Commission (SEC).

The so-called Wells notice sent by the SEC shows it has completed an investigation and intends to bring an action against the exchange. No further details were provided, but Uniswap responded to the legal document in a blog post.

“Taking into account the SEC’s ongoing lawsuits against Coinbase and others as well as their complete unwillingness to provide clarity or a path to registration to those operating lawfully within the U.S., we can only conclude that this is the latest political effort to target even the best actors building technology on blockchains,” it said. “We are confident that the products we offer are not just legal – they are transformative.”

It also argued that UNI is not a security and that Uniswap does not meet the U.S. legal definitions for being a securities exchange or broker.

UNI’s value dropped to its lowest level in six weeks within just the first hour after Uniswap revealed the SEC’s planned action.

Traders continued to panic sell the crypto in the past 24 hours, with UNI trading at $9.38 as of 2:50 a.m. EST after trading at around $11.21 prior to the announcement.

Uniswap Team “Ready To Fight” The SEC

“I’m not surprised,” said Uniswap founder Hayden Adams in an Apr. 10 X post. “Just annoyed, disappointed, and ready to fight.”

He anticipates the legal battle to “take years,” while preparing for it to “go all the way to the Supreme 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

Before the SEC can proceed with the case, the regulator will first need to receive approval from its five commissioners. One of these commissioners is SEC chair Gary Gensler, who has developed the reputation for his regulation by enforcement approach in the crypto space.

The SEC May Not Be Able To Argue Its Broker Claim

Gabriel Shapiro, the former Delphi Labs general counsel, said that the SEC would be able to be win an argument that UNI is a security, but might not be victorious in its claim that UniSwap is a securities exchange.

Sometimes you have to laugh or else you'll cry. Question: how can you square the @SECGov's claim that @Uniswap acts as a broker with the Court's ruling against the @SECGov just a handful of days ago? Answer: you can't. https://t.co/K42aKw5YZc pic.twitter.com/OcegMnDWVu

— paulgrewal.eth (@iampaulgrewal) April 10, 2024

Coinbase legal chief Paul Grewal agreed with Shapiro. In his own X post, he said that the SEC would not be able to win its claim that Uniswap is a broker.