- Uniswap founder Hayden Adams criticizes Citadel for trying to impose traditional finance rules on DeFi.
- Adams highlights Citadel’s past interference in ConstitutionDAO and ongoing lobbying with the SEC.
- Citadel argues that most DeFi platforms resemble exchanges, pushing for strict regulatory oversight on developers.
Uniswap Founder Hayden Adams blasts the Wall Street giant Citadel Securities, accusing it of attempting to impose the regulatory standards of the traditional financial world on decentralized finance, or DeFi. This follows calls by the latter for the U.S. Securities and Exchange Commission (SEC) to classify DeFi, as well as the people behind it, as the rest of the financial industry.
Adams shared his views on X, which soon got popular support from the crypto world. “First, Ken Griffin stabbed ConstitutionDAO in the back. This was after the involvement of his firm, Citadel, during the snobbish auction of the rare US Constitution booklet back in 2021. This time, it’s coming for DeFi, and it’s asking the SEC to treat software engineers for decentralized systems as it would middlemen.”
He specifically linked to the SEC filing for the Citadel, saying, “Bet Citadel has been lobbying for years for this one privately.”
Uniswap Founder Blasts Citadel Over DeFi
The Uniswap founder was not one to beat around the bush while blasting the arguments that the Citadel had raised regarding DeFi. The Uniswap founder expressed the following quote:
“Okay, that’s all pretty bad, but the actual nerve for one of their arguments to be that there is no way for DeFi protocols to provide ‘fair access’ to all things, lmao.”
He continued, “Makes sense the king of shady tradfi market makers doesn’t like open source, peer-to-peer tech that lowers barriers to liquidity creation.”
Uniswap Criticizes Citadel DeFi Regulation
This dispute arose as a result of an explanatory letter that the Citadel Securities company had written to the SEC, pointing out that most DeFi platforms qualify as traditional exchanges and broker-dealers because they link buyers and sellers in an organized manner. This means that such platforms are not exempt from regulations merely because they are based on blockchain code.
In this case, the Citadel defendants identified various players in the DeFi space, such as interfaces, developers, validators, and liquidity providers, and alleged that most of them are like the intermediaries that are regulatory compliant.
Citadel had worries that the tokenized version of U.S. stocks traded on DeFi markets could spark the development of a “shadow market” and undermine the protections afforded to investors. They were also against the exemption of open-source protocols as they could be considered intermediaries.
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SEC Targets DeFi Protocol Developers
If the SEC were to adopt the recommendations put forth by Citadel, protocol development teams, frontline operators, routing wallets, and even DAO participants could find themselves required to strictly register and comply with regulations applicable to broker-dealers. This, many people believe, would be impossible for software that is both decentralized and permissionless.
Adams put the situation into context as the continuation of the struggle between Wall Street and the world of DeFi. Through the hinting of the past incident involving ConstitutionDAO, Adams portrayed the firm as one that has always been an obstacle to crypto-driven initiatives and has brought that attitude to Washington.
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