Uniswap Labs, the creator of one of the largest decentralized trading platforms, is challenging a potential enforcement action by the U.S. Securities and Exchange Commission (SEC), arguing that cryptocurrency tokens should not be classified as securities.
The New York-based company recently refuted claims that it operated as an unregistered exchange and broker-dealer. This response follows a publication by the SEC. Wells Notice It has indicated to Uniswap Labs that it will recommend legal action against the company.
Uniswap Labs disputes the SEC’s claims.
in 40-page filing In a filing with the SEC, Uniswap Labs outlined several reasons why the agency should reconsider its legal action. The SEC’s argument is primarily based on the assumption that all tokens are securities, which Uniswap Labs disputes.
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Marvin Ammori, Chief Legal Officer at Uniswap Labs, said: Emphasize Tokens are merely a file format for value and are not securities in nature. He criticized the SEC’s attempt to redefine the terms “exchange,” “broker,” and “investment agreement” to encompass Uniswap’s operations.
This year, the SEC has taken action against numerous cryptocurrency companies through Wells notices, lawsuits, or settlements.
of the committee scrutiny There is an increasing focus on Ethereum and decentralized finance players, including Uniswap, ShapeShift, TradeStation, and Consensys. Reports also suggest that the Ethereum Foundation is investigating.
Distinction between tokens and securities
Uniswap Lab Believe The SEC’s argument against them is flawed. It does not recognize the distinction between tokens that are files for value and tokens that are securities.
If the SEC pursues a lawsuit accusing Uniswap Labs of operating as an unregistered exchange, it risks facing adverse consequences regarding its rights over cryptocurrency tokens.
Uniswap Labs warned that such lawsuits could set a precedent that would undermine the SEC’s ongoing rulemaking efforts. The company expressed its willingness to litigate if necessary and expressed confidence in a favorable outcome, saying:
But we are ready to fight. Our lawyers win high-profile SEC cases 2-0. Andrew Ceresney, former SEC enforcement chief, represented Ripple’s victory over the SEC. Don Verrilli, a former U.S. Attorney General, has argued more than 50 cases before the U.S. Supreme Court and represented Grayscale in a successful case against the SEC.
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SEC Chairman Gary Gensler has consistently argued that decentralized exchanges are not truly decentralized and should fall under the purview of regulators.
Gensler also assert Many digital assets are classified as unregistered securities under SEC regulations. In response, Uniswap Labs claimed that its governance token, UNI, does not meet the requirements of the Howey Test, a legal framework used to evaluate investment contracts.
The company also challenged the SEC’s classification of its LP tokens as securities for providing liquidity in the Uniswap pool. Uniswap Labs argued that LP tokens are an accounting tool and not an investment vehicle.
Uniswap’s native token UNI was seen. significant benefit It’s up nearly 20% in the last 24 hours alone as the market rebounded from a two-month consolidation period to trade at $9.34.
Featured image from Shutterstock, chart from TradingView.com