Uniswap Labs Responds to SEC Wells Notice, Calls the Legal Basis “Weak”

Uniswap Labs, the company behind the decentralized exchange Uniswap, has issued a response to the Wells Notice from the U.S. Securities and Exchange Commission.

Meanwhile, Uniswap’s native token UNI has surged 2.0% over the last 24 hours and 37% over the week to hit $9.48.

Uniswap Labs Criticizes SEC’s Legal Basis

In a blog post on May 21, Uniswap Labs criticized the SEC’s basis for the notice, calling it “weak.” The firm compiled a number of reasons why the agency’s pursuit of legal action needs to be reconsidered.

Uniswap noted that the SEC based the notice on the assumption that all tokens are securities. However, Marvin Ammori, the Uniswap Labs Chief Legal Officer, argued that tokens are a file format for value and not inherently securities. He went on to criticize the SEC’s efforts to redefine terms such as “exchange,” “broker,” and “investment contract” to include Uniswap’s operations.

Ammori also pointed out that the SEC’s accusation that Uniswap’s interface and wallet act as brokers would likely fail, citing a recent federal judge’s ruling dismissing similar claims against the Coinbase Wallet.

Uniswap has confirmed its readiness to engage in legal action and fight off any charges, saying that its lawyers have represented such cases, including Grayscale and Ripple, which were successful.

Uniswap lawyers warned that a case against Uniswap is bound to drive American crypto investors to use foreign trading protocols. Further, it could discourage future innovators from coming up with new ideas that bring competition and innovation in financial and commercial markets.

Response Comes as Crypto Regulation Bill Vote Nears

Uniswap Labs’ response comes just as the U.S. House of Representatives prepares to vote on the Financial Innovation and Technology for the 21st Century Act. The bill aims to reshape the regulatory roles of the SEC and the Commodity Futures Trading Commission (CFTC) regarding crypto.

According to Uniswap, if this legislation were enacted, the SEC’s case might become irrelevant, and the CFTC would gain enforcement authority in certain areas.

Uniswap received the Wells Notice in April, as confirmed on X by Ammori. He said that he was disappointed but not surprised. Further, he criticized the SEC for not having clarity and guidance on Uniswap’s self-custodial, non-intermediated products.

Coinbase also received a Wells Notice in March last year, which resulted in full-fledged lawsuits. Meanwhile, the SEC plans to bring legal action against Robinhood, a trading platform, in May.