Uniswap Labs slams SEC’s misguided attempts to regulate DeFi

Uniswap Labs has issued a defiant response to the SEC’s Wells discover, asserting the company’s attempts to regulate DeFi are misguided and legally unsound.

The corporate mentioned in a Could 20 blog post that it’s assured it can come out victorious if compelled into litigation by the SEC. Uniswap Labs mentioned:

“We’re confident that our work is on the right side of history. The SEC should not devote its taxpayer-funded resources to bringing a case against us.”

The response comes amid a broader conflict over the way forward for monetary expertise and market regulation.

Legally unsound

Uniswap Labs criticized the SEC’s efforts to broaden its jurisdiction over communications expertise and digital markets, claiming the company’s authorized arguments are weak and have been repeatedly refuted in courtroom.

The corporate mentioned:

“We believe the SEC should embrace open-source technology that improves on outdated commercial and financial systems instead of attempting to litigate it out of existence.”

It additionally highlighted that the Uniswap Protocol aligns with the SEC’s mission to shield traders and preserve honest, orderly, and environment friendly markets.

Uniswap Labs defended the Uniswap DEX as a significant market innovation that has enabled customers to transact straight with out counting on centralized intermediaries. It added that the protocol — which operates autonomously and has facilitated $2 trillion in buying and selling quantity and not using a single hack — presents clear, low-cost, and environment friendly buying and selling accessible globally 24/7.

Akin to a PDF file

In its full Wells response, Uniswap Labs rejected the SEC’s assertions that the protocol is an unregistered securities change and that the UNI token constitutes an funding contract.

It argued that the ERC-20 token normal it helps is a “general file format for all forms of value.”

The corporate acknowledged:

“A token is a file format, like a PDF. The Protocol is a general purpose computer program that anyone can use and integrate, like TCP/IP.”

Uniswap Labs added that, even when the SEC is appropriate that some securities transactions happen on its protocol, the protocol is “almost exclusively used for non-securities transactions” involving Ethereum, wrapped Bitcoin, stablecoins, and memecoins.

The SEC has argued that Uniswap is an change managed by Uniswap Labs and that its interface acts as an unregistered broker-dealer.

Nonetheless, Uniswap Labs argues that the SEC’s place relies on incorrect assumptions and contends that these claims wrongly equate a digital file format with a safety.

The corporate mentioned the UNI token was airdropped to 1000’s of customers with out the expectation of revenue from the DEX’s efficiency, which means that it doesn’t meet the standards required by the Howey Check.

Uniswap assured in victory

Uniswap Labs CLO Marvin Ammori expressed confidence in Uniswap’s stance, stating on X:

“We have a very strong case. If forced to litigate, we will win.”

He asserted that Uniswap Labs’ case is “so strong that the SEC is trying to change the law.” As well as to describing the file codecs argument, Amorri mentioned the SEC is working to redefine “exchange” and different phrases past their present that means.

He mentioned that courts have dismissed comparable arguments in opposition to Coinbase by discovering that self-custodial wallets don’t meet the necessities to be a dealer.

Uniswap Labs has employed legal professionals who’ve gained two high-profile instances, together with former SEC enforcement head Andrew Ceresney and former US Solicitor Normal Don Verrilli.

The 2 legal professionals represented Ripple and Grayscale in opposition to the SEC, respectively.

The SEC issued a Wells discover to Uniswap Labs on April 10, which indicated that the SEC’s Enforcement Division meant to advocate a lawsuit in opposition to the agency.

In latest weeks, the SEC has additionally filed Wells notices in opposition to the Ethereum improvement agency Consensys and the retail brokerage Robinhood.

The SEC has not but initiated the anticipated lawsuits in opposition to the three corporations. Consensys alone has responded with a preemptive lawsuit.

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