The SEC is taking enforcement action against a major player in the decentralized finance sector of the cryptocurrency market.
On Wednesday, Uniswap Labs, the firm managing the biggest decentralized exchange (DEX), received a notice from the regulatory body.
Uniswap To Be Sued By SEC
On Wednesday, Uniswap Labs made an announcement in a public press release, assuring their supporters that they are prepared and determined to take action.
The team commented that the SEC’s lawsuit against the biggest centralized crypto exchange in June 2023 targets not just any crypto platforms but even the most reputable ones, such as Uniswap and Coinbase.
“All Uniswap products and the Uniswap Protocol are unaffected,” they added.
In simple terms, Uniswap Labs is a software development firm based in New York City that plays a leading role in creating and maintaining the Uniswap decentralized finance (DeFi) platform on Ethereum.
Using the protocol, users can easily and directly access cryptocurrency trading and liquidity without the need for permission or intermediaries, making it more open, secure, borderless, and self-governing than conventional alternatives.
The SEC’s intentions towards Uniswap Labs are unclear as of now, but based on its past actions, the agency has a history of targeting cryptocurrency exchanges over alleged security listings. For instance, last year, it filed lawsuits against Binance, Coinbase, and Kraken for similar reasons.
Many project teams including Ripple, Terraform Labs, and others have been accused of selling unregistered securities as crypto tokens. (Or, These teams, including Ripple and Terraform Labs among others, have faced accusations for issuing unregistered securities in the form of crypto tokens.)
Uniswap Labs might be perceived as engaging in two distinct roles. On one hand, their platform supports trading for over thousands of tokens. On the other hand, they issue their native token, UNI, which grants holders a portion of the protocol earnings and influence over its future enhancements through voting rights.
Uniswap’s Legal Defense
Uniswap maintains that most of the assets transacted on its platform are not considered securities based on their interpretation. They referenced the court case SEC vs. Ripple as evidence. Among these assets is UNI token, which according to Uniswap, does not meet the requirements of the Howey Test because it does not involve investment in a single business enterprise.
The firm stated that even if the Ripple case and the Supreme Court’s Howey test didn’t prevent the SEC from making their arguments, the Uniswap Protocol, web application, and wallet would still not fit the legal descriptions of a securities exchange or broker.
According to the decentralized exchange, under current laws, the Securities and Exchange Commission (SEC) does not have authority to regulate self-custodial, on-chain trading decisions. In simpler terms, since the trading is conducted on a decentralized platform where users hold their own keys, and the transactions are recorded on a blockchain, the SEC’s jurisdiction may not apply.
“Uniswap Labs asserted that their technology platform, similar to Bitcoin and Ethereum, is adequately decentralized. They express confidence in the legality of their offerings.”
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2024-04-11 03:18