Uniswap, a decentralized exchange, is going to be subjected to the U.S. Securities and Exchange Commission (SEC) inquiry, as they have recently received a Wells notice from the SEC. The subject line of this notice informs the company that it has been given a warning that it is about to face enforcement action from the regulatory agency.

Following the announcement, UNI, Uniswap’s native token, decreased by 16.12% in worth, dipping from $11.21 to $9.33. Hayden Adams, the founder of Uniswap Labs, which is based in New York, conveyed his disappointment and preparedness to contest the SEC’s suit if necessary. Adam’s Declaration also added that the matter was likely to be taken to the Supreme Court and might take years before settlement with the regulatory watchdog.

The SEC’s Wells notice had an answer in view, at which point Uniswap resisted with a UNI token that uses spoken designation strategy to be a securities show. The company additionally claimed that it examines U.S. regulations related to exchanges and brokerage and falls out of these definitions. While highlighting Uniswap’s stand for robustness against the regulator, the defense point also reflects its determination to refute the SEC’s allegations.

The exactitude of the crypto world can be noticed by looking at what is going on, with all the industry experts and legal advisers being invited to express their opinions. Bill Hugue, senior counsel at ConsenSys. Affirmed that SEC’s voting means the commissioners. Therefore, Hughes posted that the SEC is expected to file a lawsuit against the protocol, insisting that the community remain calm and does not include holders of any UNI tokens or defendants in the SEC complaint.

Uniswap’s PR tactics could weaken SEC case

Terri Starker, a former chief of the SEC Enforcement Department, argued that the Wells Protocol gives those involved a chance to succeed in persuading SEC commissioners to settle cases out of court. Stark faulted Uniswap’s PR strategy with the SEC as being, from his perspective, a backfire. As per Stark, antagonizing the SEC may damage Uniswap’s position. Thus, it would be better to have an alternative range of responses.

Gabriel Shapiro, former general counsel at Delphi Labs, wondered speculatively what the outcomes of the litigation by the SEC could be. Shapiro is convinced that this segment of the SEC will work in securities matters concerning UNI, unlike the part of the SEC claiming that Uniswap functions as a securities exchange. This perspective offers a universal view of the possible legal defense measures and argues that Uniswap is likely to present in court.

Paul Grewal, the chief legal officer of Coinbase, did not rant against the issue, which Shapiro criticizes, but focused on the unique nature of Uniswap broker. Grewal most referenced a recent court decision in favor of Coinbase. This case established that the SEC is proving Coinbase to be a brokerage activity. Such a precedent may be a sliver of hope for Uniswap to solve the upcoming legal issues.

Market reaction and future outlook

The market has responded promptly to the SEC’s ‘Wells notice’ to Uniswap, as it is now observable that UNI’s price has dropped significantly. This episode manifests the essence of the fluctuating character of cryptocurrency markets, especially with regard to regulatory development. Investors and stakeholders in the crypto world are on the watch for how legal actions can affect their whole business by setting a precedent case.

This legal battle could shape the future of crypto and DeFiin the U.S. for a long time. The trial will probably be about the basic notions of the crypto market and regulation. Such an effect may define future regulation measures for the same technological processes and platforms.

News sourced from; https://twitter.com/haydenzadams/status/1778126466984575166

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