On April 10th, the U.S. Securities and Exchange Commission (SEC) delivered a Wells notice to Uniswap, the decentralized exchange, as confirmed by Uniswap’s chief legal officer, Marvin Ammori, on social media platform X (formerly Twitter).
A Wells notice is a formal communication from the SEC signaling their intent to recommend enforcement action against an entity or individual. In response, the recipient has the opportunity to present a written explanation or defense, known as a “Wells submission,” to contest the proposed action.
Uniswap, a decentralized exchange operating on the Ethereum blockchain, facilitates automated token swaps without the need for traditional intermediaries like centralized exchanges.
The SEC’s scrutiny of Uniswap Labs, the primary developer behind Uniswap, dates back to 2021. In response to regulatory pressure, Uniswap Labs has previously delisted certain tokens from its platform.
1/ Today’s Wells notice against @Uniswap is disappointing, but is not unexpected from this SEC
— Marvin Ammori (@ammori) April 10, 2024
It’s another abuse of power – unsurprising from an SEC that:
Last month, a federal judge ruled committed a "gross abuse of power" by lying in court about a crypto project
In defense, Uniswap Labs has asserted its role as a software developer responsible for the front-end interface of the application, distinguishing it from the autonomous Uniswap protocol itself.
Marvin Ammori emphasized that the Uniswap Protocol, web app, and wallet do not fit the legal definitions of securities exchanges or brokers. He underscored the need for clear regulations and a rule of law framework in the U.S. crypto landscape.
This recent legal action by the SEC against Uniswap echoes similar notices issued to major crypto exchanges like Coinbase and Binance in the past.
Meanwhile, in Europe, regulatory developments are underway with the advancement of the Markets in Crypto-Assets (MiCA) regulation. This legislation seeks to regulate decentralized finance (DeFi) protocols, including their user interfaces.