Uniswap Labs, the entity behind the decentralized exchange Uniswap, has responded to the Wells Notice issued by the U.S. Securities and Exchange Commission (SEC).

Meanwhile, the native token of Uniswap, UNI, has seen a 2.0% increase over the past 24 hours and a 37% surge over the week, reaching $9.48.

Criticism of SEC's Legal Basis by Uniswap Labs

In a blog post on May 21, Uniswap Labs criticized the SEC's rationale for the notice, describing it as "weak." The company outlined several reasons why it believes the SEC's pursuit of legal action should be reconsidered.

Uniswap highlighted the SEC's assumption that all tokens are securities as the basis for the notice. However, Marvin Ammori, the Chief Legal Officer at Uniswap Labs, argued that tokens represent a value file format and are not inherently securities. He further criticized the SEC's attempt to broaden the definitions of terms like "exchange," "broker," and "investment contract" to encompass Uniswap's operations.

Ammori also contested the SEC's assertion that Uniswap's interface and wallet function as brokers, citing a recent federal judge's dismissal of similar claims against the Coinbase Wallet.

Uniswap affirmed its readiness to defend against any charges, noting that its legal team has successfully represented cases such as Grayscale and Ripple.

Uniswap's lawyers cautioned that legal action against the platform could drive American crypto investors to utilize foreign trading protocols and deter future innovators from introducing new ideas that promote competition and innovation in financial markets.

Response Coincides with Crypto Regulation Bill Vote

Uniswap Labs' response coincides with the impending vote in the U.S. House of Representatives on the Financial Innovation and Technology for the 21st Century Act. The bill aims to redefine the regulatory roles of the SEC and the Commodity Futures Trading Commission (CFTC) in the crypto space.

Uniswap suggested that if this legislation were enacted, the SEC's case against it might become irrelevant, with enforcement authority potentially shifting to the CFTC in certain areas.

Uniswap received the Wells Notice in April, as confirmed by Ammori, who expressed disappointment but not surprise. He criticized the SEC for lacking clarity and guidance on Uniswap's self-custodial, non-intermediated products.

Coinbase also faced a Wells Notice in March last year, resulting in lawsuits. Additionally, the SEC intends to take legal action against Robinhood, a trading platform, in May.