Uniswap's UNI Token Hits Six-Week Low Amid Looming SEC Legal Battle
Summary:
Uniswap's token (UNI) has hit a six-week low following a Wells notice from the US Securities and Exchange Commission, indicating a probable lawsuit. Uniswap's founder, Hayden Adams, is prepared for a potentially lengthy legal battle. Despite the SEC's potential lawsuit, advisors reassured UNI holders and protocol users it's unlikely they would be targeted. Legal analysts speculated the SEC might win the lawsuit if arguing UNI is a security, but may lose if it tries to classify Uniswap as a securities exchange.
The decentralized exchange token Uniswap (UNI) has suffered a significant slump, hitting a six-week low, following its intended legal battle with U.S. regulators. The token's price fell by 10%, transitioning from $11.21 down to $10 after the exchange revealed it had received a Wells notice from the United States Securities and Exchange Commission (SEC). The Wells notice represents a preliminary enforcement action plan. Currently, the UNI token is priced at $9.66, which is the lowest it has been since late February, as indicated by Cointelegraph Markets Pro and TradingView data.
Hayden Adams, the founder of the New York-based Uniswap Labs, expressed frustration and readiness to fight the impending lawsuit on an April 10 X post. He also acknowledged the legal battle could take years and might escalate to the Supreme Court level. The exact details of the Wells notice were not disclosed by Uniswap, but their blog post regarding the notice argued that UNI doesn't qualify as a security under U.S. law, nor meets the legal definitions of a securities exchange or broker.
The SEC remained tight-lipped about the potential investigation, but Consensys senior counsel and regulatory matters director Bill Hughes clarified that before a lawsuit could proceed, it needs approval from the SEC's five commissioners, including chair Gary Gensler. Hughes believes a lawsuit is inevitable, but he advised those concerned to remain calm, insisting it's highly unlikely the SEC would target UNI holders or protocol users.
John Reed Stark, former chief of SEC internet enforcement, explained that a Wells notice offers the recipient the chance to counterargue in an attempt to dissuade the commissioners from pursuing a lawsuit. Stark found Uniswap's reaction of embarking on a PR campaign to criticize the SEC, unsurprising. He criticized this approach, calling it a weak and risky strategy.
Stark suggested Uniswap is resorting to claiming the SEC is overstepping its authority and condemning the SEC's 'anti-innovative enforcement paradigm.' He predicted that the SEC will deliver a heavy-handed and detailed federal complaint which would likely overcome any attempts to dismiss it.
Former general counsel of Delphi Labs, Gabriel Shapiro, tentatively shared his belief that while the SEC might win on UNI being a security, it might lose if it accuses Uniswap of being a securities exchange. This viewpoint was backed up by Coinbase's legal chief, Paul Grewal, who pointed to a recent judge's ruling in the SEC's case against Coinbase, stating that the SEC failed to prove Coinbase conducted any brokerage activity with its decentralized wallet.
Published At
4/11/2024 4:29:33 AM
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