Uniswap (UNI), the token for the decentralized exchange of the same name, sunk to a six-week low after Uniswap said it received a proposed lawsuit notice from United States regulators — which it is “ready to fight.”
UNI dropped 10% from $11.21 to $10 in the hour after Uniswap said it received a Wells notice from the Securities and Exchange Commission, a notification that the regulator is planning enforcement action.
UNI is currently trading at $9.66, its lowest point since late February, according to Cointelegraph Markets Pro.
“I’m not surprised. Just annoyed, disappointed, and ready to fight,” the New York-based Uniswap Labs founder Hayden Adams wrote in an April 10 X post. “This fight will take years [and] may go all the way to the Supreme Court.”
Uniswap didn’t share the exact contents of the Wells notice, but in a blog post regarding the notice claimed UNI wasn’t a security and it doesn’t meet the U.S. legal definitions of securities exchange or broker.
An SEC spokesperson told Cointelegraph it doesn’t comment on “the existence or nonexistence of a possible investigation.”
Consensys senior counsel and regulatory matters director Bill Hughes wrote on X clarifying that SEC staff have to first get the lawsuit approved by the agency’s five commissioners — inclusive of chair Gary Gensler.
“We all know that the Chair wants to sue them, and two commissioners are NOT going to disagree, and two will disagree,” Hughes wrote. “So a suit is a foregone conclusion, but there isn’t a suit yet.”
He urged those “freaked out” to “take a breath and calm down” as it was “extremely doubtful” the SEC would target UNI holders or protocol users.
Former SEC internet enforcement chief John Reed Stark wrote on X a Wells notice gives the recipient an opportunity to argue why the commissioners should decline a recommended lawsuit.
He said the notice to Uniswap was “not surprising” and is “always amazed” when Wells notice recipients “fight back by throwing stones at the SEC with obnoxious/insulting PR campaigns, like the one Uniswap seems to have begun.”
“Any SEC lawyer will agree that responding to a Wells by berating the SEC, calling them names, etc. is a weak, risky and losing strategy.”
Stark claimed Uniswap was recanting a “tired, anemic, old and failed monologue” by alleging the SEC is abusing its power and “lambasting the SEC’s ‘anti-innovative enforcement paradigm.’”
“Expect the SEC Enforcement staff to lean in and file a voluminous and robust federal complaint, which will inevitably survive the usual motion to dismiss, prevail against the typical motion for summary judgement and win on just about every other litigated issue that follows,” he said.
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Former Delphi Labs general counsel Gabriel Shapiro wrote on X that his hunch is the SEC “will win on securities issues with UNI” but will lose if it claims Uniswap is a securities exchange.
Paul Grewal — the legal chief of Coinbase, which is being sued by the SEC — agreed with Shapiro and wrote if the SEC claims Uniswap is a broker, he believes it wouldn’t be able to argue its claim.
He pointed to a judge’s decision last month in the SEC’s suit against Coinbase, which determined the SEC failed to allege Coinbase conducted brokerage activity through its decentralized Coinbase Wallet.
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