Author: Grapefruit, ChainCatcher
Editor: Marco, ChainCatcher
On April 11, Fortune Magazine reported that the U.S. Securities and Exchange Commission (SEC) has issued a warning to Uniswap and intends to take enforcement action against the company.
Subsequently, Uniswap founder Hayden Adams responded on the social platform that Uniswap Labs had received a formal Wells Notice issued by the U.S. Securities and Exchange Commission (SEC) and that the SEC planned to file a lawsuit against it.
Regarding the SEC's lawsuit, he said that Uniswap has processed more than 2 trillion US dollars in transactions, and many teams and developers have forked or developed based on its code. The product is legal, and he is ready to fight back and will fight it to the end.
The "Wells Notice" is a reminder notice from the U.S. SEC before filing a formal lawsuit against the target, indicating that the regulatory agency plans to take enforcement action against it, and that there is an opportunity to refute, communicate and negotiate with the SEC on certain allegations before receiving the formal lawsuit.
After the news broke, the native token UNI of the Uniswap platform plummeted, falling from US$11.2 to US$8.9, a short-term drop of more than 20%. As of press time, the price was US$9.3.
UNI dividend plan has been put on hold
The impact of the SEC's black swan event is still ongoing, and there are constant reports of large-scale selling of UNI tokens on the chain. On-chain data shows that after the SEC's accusation was issued, the Uniswap team or early investor-related wallets sold 15,000 UNI (worth $167,000) at an average price of $11.18; a smart money address transferred more than $10 million worth of UNI tokens to Binance; the whale marked as "whitzardflow.eth" on the chain had more than 100,000 UNI positions (worth about $1 million) liquidated, etc.
The dividend plan of UNI tokens may be put on hold as a result. The on-chain voting results of the proposal to "activate Uniswap protocol governance" that was originally scheduled to be released on March 8 have been delayed. Some users said that this was because the SEC had affected the advancement of the proposal.
On February 23, the Uniswap Foundation announced that it had released a proposal to "activate Uniswap protocol governance" on the governance forum, proposing that its protocol fees be distributed proportionally to UNI token holders who have pledged and delegated their voting rights, and that voting will begin on Snapshot on March 1. After the news of the Uniswap dividend proposal came out, the price of UNI tokens skyrocketed, rising from $7 to a high of around $12 overnight.
The governance proposal ended on March 7 and received a 100% vote approval rate. It was supposed to be released for on-chain voting on March 8, but it was not implemented as scheduled. There was no news and no official explanation.
It was not until the news of the SEC's lawsuit came out that users realized that it was the SEC that forced the UNI dividend plan to be suspended.
Can Uniswap be pacified with a “fine”?
In response to the SEC’s actions, Uniswap Labs wrote in its official article “Fighting for DeFi” that Uniswap products are legal, all existing products will continue to run and be available, and new products will continue to be launched.
However, the specific content and nature of the SEC’s allegations against Uniswap Labs are still unclear.
Based on previous lawsuits filed by the SEC against well-known cryptocurrency companies such as Binance, Coinbase, and Ripple, Uniswap Labs may be charged with crimes such as "illegally offering unregistered securities to the public, or failing to register as a broker or exchange."
However, the notice issued by the SEC this time is not a formal prosecution or regulatory enforcement document, leaving Uniswap with an opportunity to communicate.
Last August, the Southern District Court of New York (SDNY) dismissed a class action lawsuit against Uniswap. In the case, a group of investor plaintiffs accused Uniswap and its founder of allowing fraudulent tokens to be issued and traded on the protocol, alleging that it had not been registered under the U.S. federal securities law, illegally listed fraudulent tokens, caused damages to investors, and demanded compensation.
Regarding this case, the judge believes that the current crypto regulatory system cannot provide a basis for the plaintiff's claims. Uniswap is not responsible for any damages caused by third parties using the protocol, and the token issuer that committed the damaging act should be held responsible.
Although the SEC warning came very suddenly, some users believe that Uniswap is unlikely to be at a disadvantage in this future confrontation.
Some community users believe that Uniswap is likely to settle the SEC's lawsuit with a fine.
As the regulatory hammer has not yet officially landed, the content and details of the accusations against Uniswap have not been clarified, and the future is still full of uncertainty, which has once again cast a shadow over the long-stagnant DeFi industry.
As the leading product in the DeFi industry, every move of the SEC towards Uniswap will affect the future development of other DeFi protocols.
