Uniswap, the decentralized exchange, experienced a significant drop in the price of its token, UNI, after revealing that it had received a notice of a proposed lawsuit from US regulators. However, Uniswap stated that it is prepared to fight against the allegations. Following the announcement, UNI’s value plummeted by 10% from $11.21 to $10 within an hour. As of now, UNI is trading at $9.66, which is the lowest it has been since late February. TradingView data also indicates that UNI’s price drop has brought it to a 47-day low.
In response to the news, Hayden Adams, the founder of Uniswap Labs, expressed his frustration and determination to fight against the lawsuit. He stated, “I’m not surprised. Just annoyed, disappointed, and ready to fight. This fight will take years and may go all the way to the Supreme Court.” Although the exact details of the notice were not disclosed, Uniswap asserted in a blog post that UNI is not a security and does not meet the US legal definitions of a securities exchange or broker.
The Securities and Exchange Commission (SEC) declined to comment on the existence or nonexistence of a possible investigation. Bill Hughes, a senior counsel at Consensys, clarified that the SEC staff must obtain approval from the agency’s five commissioners, including Chair Gary Gensler, before proceeding with the lawsuit. Hughes anticipated that a lawsuit against Uniswap was inevitable, but it has not been filed yet.
Despite the uncertainty surrounding the situation, Hughes reassured individuals who may be concerned, stating that it is highly unlikely for the SEC to target UNI holders or protocol users. John Reed Stark, a former chief of the SEC’s internet enforcement division, explained that a Wells notice provides the recipient with an opportunity to argue against a recommended lawsuit. He expressed his surprise at Uniswap’s response, which he described as obnoxious and insulting towards the SEC.
Gabriel Shapiro, former general counsel at Delphi Labs, suggested that the SEC would likely win on securities issues related to UNI but would struggle if it claimed that Uniswap was a securities exchange. Paul Grewal, the legal chief of Coinbase, which is currently facing a lawsuit from the SEC, agreed with Shapiro’s assessment. Grewal pointed to a recent court decision in the SEC’s case against Coinbase, where the judge determined that the SEC had failed to prove that Coinbase engaged in brokerage activity through its decentralized Coinbase Wallet.
In conclusion, Uniswap’s UNI token experienced a significant drop in value following the announcement of a proposed lawsuit from US regulators. Uniswap has vowed to fight against the allegations, emphasizing that UNI is not a security. The situation is still unfolding, and it remains to be seen how the SEC will proceed with the lawsuit.