Uniswap Labs responds to Wells notice: SEC's arguments are weak and will ultimately lose, ready to fight for DeFi

Uniswap developer Uniswap Labs responded to the Wells notice issued by the U.S. Securities and Exchange Commission (SEC) in an official statement yesterday, stating that the SEC's move reflects a mistaken and weak legal position, an attempt to improperly expand its authority over the crypto industry; and if necessary, legal avenues will be pursued to fight for the DeFi sector.

Uniswap receives Wells notice, founder vows to fight SEC to the end

Uniswap is Completely Legal and a Major Innovation

Firstly, Uniswap Labs claims that its product has generated over $2 trillion in trading volume within five years and operates as an open-source, fully autonomous software that provides trading services to users globally around the clock.

On the other hand, DeFi is considered a significant innovation as it addresses inefficiencies, lack of transparency, non-immediacy, and high transaction costs compared to traditional financial markets:

DeFi gives users unprecedented control over all their assets, enabling them to create value in new ways on the internet.

It is also emphasized that "the SEC should protect legitimate open-source technologies to improve outdated commercial and financial systems, rather than attempting to make them disappear through litigation."

SEC's Legal Arguments are Flawed and Weak

Furthermore, Uniswap Labs believes that the legal arguments presented by the SEC are "flawed and weak," suggesting that the SEC may face defeat if enforcement action is taken:

The SEC's arguments are based on a mistaken assumption that almost "all" tokens are securities.

Uniswap Labs' Chief Legal Officer Marvin Ammori emphasizes that tokens are merely a file format that can represent various values, primarily commodities and internet resources, rather than securities:

Even in cases involving securities, the Uniswap protocol and related applications do not fall under the definitions of "securities exchanges" or "brokers." The law requires such platforms to be operated by professional teams and specific organizations, whereas Uniswap is autonomous software with no human control.

At the same time, Ammori also criticizes the SEC for overreach, highlighting that the agency is attempting to excessively expand its legal definitions and jurisdiction through "aggressive tactics":

The SEC is trying to litigate against Uniswap by changing the definitions of terms, similar to the situations faced by Coinbase, Robinhood, and DebtBox, but such actions are unlikely to hold up in court.

Crypto Lawyers Accuse SEC of Misusing Wells Notices, CFTC: More Enforcement Actions to Come

Uniswap: Prepared to Battle SEC for DeFi

Finally, in anticipation of potential litigation, Uniswap Labs and Ammori have stated their readiness to confront the SEC in court:

Our external lawyers have already fought and defeated the SEC in cases involving Grayscale and Ripple, and we will be the next successful case.

However, Ammori also expresses concerns that even if the SEC loses this lawsuit, it could weaken future technological developments in DeFi and cryptocurrencies.

Is the Uniswap vs. SEC Lawsuit Inevitable? Legal Experts Point Out Potential Reasons for SEC's Defeat

As mentioned in a tweet by Uniswap on X here:

We believe Uniswap's product is on the legally correct side and is a part of history. DeFi is revolutionary, and we will strive to protect it.