Uniswap became the latest to receive the SEC’s Wells Notice as the regulator began its clampdown against the DeFi industry. Although the Wells Notice is not a formal prosecution or regulatory enforcement document, it serves as an early warning of a planned enforcement action against projects deemed suspicious. Uniswap, in its response, vowed to take on the SEC head-on.
The Wells Notice did not specify reasons, necessitating Uniswap Labs to establish its innocence. However, Ripple received the SEC’s Wells Notice in December 2020, leading to its delisting from Coinbase. The move has sparked panic across the market. Data from Lookonchain revealed that three whales sold 2.03 million UNI [about $20 million], resulting in a roughly 17% drop [a near 50-day low] in the UNI price.
As netizens debate the next course of action, some speculate that the SEC will now attempt to go after the AMM’s liquidity provision and staking, claiming that there is an “expectation of profit based on the ‘efforts’ of others.” This seems to be the target. “They aren’t just trying to take down Uniswap. They are trying to take down DEFI as a whole. Their goal is clearly to make it so that ONLY incumbent institutions can be liquidity providers,” wrote one user.
Uniswap’s Epic Response to SEC: ‘We’re More Than Securities
The latest development comes just weeks after a judge dismissed the SEC for litigating against an on-chain, non-custodial wallet. Reacting to the significant escalation, the Uniswap team stated, “Despite SEC rhetoric that “most” tokens are securities, the reality is that tokens are just a digital file format The vast majority of tokens traded on Uniswap are definitively not securities, just like most paper is not stock certificates.”
Once seen as the epitome of crypto decentralization, the Uniswap Protocol has handled more than $2 trillion in volume. “Numerous teams and developers have either forked our code or constructed upon it. We have established a fresh financial infrastructure that is transparent, equitable, secure, and inclusive, fueling an entire industry.” The team further signed off by stating, ” While our legal team takes on this fight, we’ll continue to do what we do best: build.”