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Uniswap responds to SEC notice

Uniswap, which is one of the largest decentralized cryptocurrency exchange protocols, has come under the magnifying glass of the SEC, which is investigating whether the platform’s operations comply with regulations.

Date: 2024-05-24 Author: Marek Stiller
Uniswap responds to SEC notice

Uniswap Labs filed a 40-page response to the SEC’s Wells Notice on Tuesday, objecting to the potential lawsuit and urging the agency to drop the case.

The ruling comes after the agency raised concerns a few weeks ago that Uniswap’s operations may violate US securities laws. The decentralized cryptocurrency exchange is now explaining in detail why the SEC may be wrong.

Uniswap serves as a decentralized financial platform (DeFi) serving developers, traders and liquidity providers. However, the SEC claimed that the Uniswap protocol operates as an unregistered securities exchange under the control of Uniswap Labs, while describing the Uniswap interface as an unregistered securities broker-dealer and the UNI token as an investment contract.

Uniswap responded that the SEC’s legal claims are “weak” and contradicted by court rulings.

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The cryptocurrency market argued that the agency is stretching the definitions of securities, exchanges and contracts to an unreasonable point. It also said that the SEC’s accusations are based on the assumption that any value stored in digital format can be considered a security.

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

Uniswap argued that most of the transactions on his platform do not involve securities, even by the SEC’s own standards. He pointed out that a large portion (65%) of its trading volume involves assets that the SEC itself has admitted are not securities, such as Ether, Bitcoin and stablecoins.

In addition, the memorandum argued that U.S. securities regulations would not apply to the majority of users, as an estimated 75% are from outside the U.S.

The Marketplace said that even if a few hedging transactions took place on its platform, it is not a securities exchange. It said the court would not see it that way because the platform was not built specifically for these transactions.

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Marek Stiller
Marek Stiller
Founder of the "Cryptocurrency for Beginners" channel on YouTube. He collaborates with Łukasz to form the Arena Trading group, while at the same time being passionate about blockchain technology. His knowledge and experience in the cryptocurrency industry help beginner investors better understand this dynamic market.
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