It’s now been over a month since that fact came to light. Uniswap UNI
+3.31%
The research institute The Wells notice indicates that the U.S. Securities and Exchange Commission plans to prosecute the developer of the largest decentralized exchange.
Many thought this was the real start of the “war on DeFi.” This is because it is the first case filed against a major DeFi platform. It’s no secret that the SEC has a negative view of cryptocurrencies, but its previous high-profile targets have typically been centralized institutions.
The SEC has not slowed down the cryptocurrency rampage since it most recently sent Wells notices to the cryptocurrency arms of Consensys and Robinhood. Shortly after news of the Wells announcement on Robinhood broke, the company reported first-quarter earnings with cryptocurrency trading volume up 224% compared to the previous year.
The impact of this notice still appears to be weighing heavily on DeFi, as questions grow about the future and what this means for the industry. That said, nothing too serious is likely to happen in the short term. Coinbase received the Wells notice in March 2023 and wasn’t actually sued until June 2023, and the legal battle is still ongoing nearly a year later. Coinbase has continued to operate normally.
However, when this news was announced, the price of UNI, Uniswap’s governance token, naturally plummeted. UNI was trading around $11.60 before the Wells announcement and fell to $6.43 shortly after. It found its footing at just over $7, but showed no significant rebound. The same goes for many other DeFi assets that have felt the heat.
DeFi dominance, or the ratio of the market capitalization of DeFi tokens to the total cryptocurrency market capitalization, fell to 3.63% on April 14, just a few days after Uniswap’s Wells announcement. This is the lowest market share since June 2022. soil 
Luna
+4.35%
/Luna caused a sell-off in many cryptocurrency assets.
DeFi dominance appears to have rebounded slightly and found a new balance, hovering just below 3.75%. This is a historically very low number, especially when dominance remains at this level for several days. In 2022, DeFi dominance returned to over 4% by July. DeFi dominance actually remained above 3.75% from June 2022 to April 2024.
It’s no surprise that the impact of the Wells announcement will be significant for the DeFi space, but it’s currently unclear what could help revitalize the subsector unless positive news emerges from the lawsuit.
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