Uniswap Labs responds to Wells notice, calls SEC's legal case 'weak and wrong'

Uniswap Labs, the developer of the decentralized exchange Uniswap, responded to the Wells notice issued against them by the United States Securities and Exchange Commission. 

The SEC alleges that the DEX acts as Uniswap Labs' unregistered securities exchange and unregistered securities broker-dealer, with UNI tokens representing an investment contract, Uniswap Labs noted in a Tuesday release .

In the response, Uniswap Labs added that the SEC's "aggressive theories" attempt to stretch the regulator's reach beyond its jurisdiction, saying that it believes the House will pass a bill giving the Commodity Futures Trading Commission (CFTC) authority over digital asset trading. Uniswap Labs said it also believes the regulator "should embrace open-source technology that improves outdated commercial and financial systems, instead of attempting to litigate it out of existence."

"We’re confident that our work is on the right side of history," Uniswap wrote in a Tuesday. "The SEC should not devote its taxpayer-funded resources to bringing a case against us."

'Weak and wrong' arguments

Uniswap Labs' leadership broke down why many of the SEC's accusations against the decentralized exchange are misguided.

As the firm's Chief Legal Officer Marvin Ammori explained  on the social media platform X, the SEC's argument fails to fully consider the platform's use of commodities and what those commodities truly are.

"The SEC is targeting assets and people in nations well beyond its authority," Ammori said. "The protocol is used overwhelmingly to trade obvious commodities – ETH, WBTC, and stablecoins alone are about 65% of the trading. An estimated 75% of usage is outside the US. The math on these two means over 90% of volume is obviously beyond SEC jurisdiction. So the SEC would be bringing a case to target at best a very small percentage of volume on a general-purpose technology – the tail wagging the dog."

"The legal arguments against Uniswap are weak and wrong," Ammori added. "The SEC arguments rest on the false assumption that just about 'all' tokens are securities (which the SEC then refuses to register). But a token is merely a file format – like a PDF or JPEG. Tokens can represent any value, and overwhelmingly represent commodities (BTC, ETH, stablecoins) and memes and access for useful networks. PDFs are not inherently stock certificates, and tokens are not inherently securities."

Uniswap Wells notice

On April 10, the SEC issued a Wells notice against Uniswap Labs. A Wells notice indicates future legal action against the recipient. 

Others in the crypto industry rallied behind Uniswap, viewing the regulator's move as an attack on crypto and especially decentralized finance. 

The Wells notice did not slow down trading on the DEX, however. In the days after receiving it, Uniswap saw nearly $3 trillion in trading volume. 

Uniswap is one of the largest decentralized exchanged by volume, The Block's Data Dashboard shows . It brought in $71.45 billion of spot volume in April, comprising 56% of the month's total volume.