Legal Expert Points Out Potential Reasons for the Conclusion of Uniswap’s Lawsuit with SEC

The US Securities and Exchange Commission (SEC) has issued a Wells Notice to Uniswap Labs, indicating the possibility of filing a lawsuit against the company. Last March, Coinbase also received a Wells Notice and entered into a long-term litigation with the SEC. This article compiles the opinions of legal experts in the crypto industry regarding this event.

(Uniswap receives Wells Notice, founder vows to fight SEC to the end)

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Uniswap users should not panic
Former SEC executive: Uniswap’s response is terrible
Arguments for SEC’s potential defeat
Uniswap users should not panic
Bill Hughes, Senior Legal Advisor at Consenys, points out that the SEC first needs approval from five members of the Commission, including Gary Gensler, in order to file a lawsuit. However, based on the internal vote of the SEC for the Bitcoin ETF, it is likely that only two members of the Commission, such as Hester Peirce, who supports the crypto industry, will vote against it. This suggests that the lawsuit may be a done deal (3:2). Bill Hughes still advises everyone not to panic because it is highly unlikely for the SEC to charge UNI holders and protocol users.

(Admitting approval of ETF due to GrayScale litigation loss, Gary Gensler: It is by no means an endorsement of Bitcoin)

Former SEC executive: Uniswap’s response is terrible
Former SEC Internet Enforcement Director, John Reed Stark, mentioned that institutions receiving Wells Notices usually have the opportunity to explain themselves to the SEC. He is not surprised that Uniswap received the notice, but he is surprised that these institutions often respond to the SEC with derogatory and offensive public statements, and it seems that Uniswap is starting to do the same. He says that any SEC lawyer would agree that responding to a Wells Notice in a derogatory manner is a weak and foolish strategy. It can be expected that SEC enforcers will submit a detailed and strong accusation to the federal court and win in a typical summary judgment.

Arguments for SEC’s potential defeat
Gabriel Shapiro, former legal advisor at Delphi Labs, pointed out several possibilities. He believes that the SEC will win on the issue of “UNI as a security,” but if the SEC accuses Uniswap of being a “broker-dealer,” they will lose. Paul Grewal, General Counsel at Coinbase, also holds the same view, citing a ruling by a federal judge in March, where the judge found that the SEC failed to provide evidence that Coinbase engaged in broker-related activities through Coinbase Wallet.

Bankless published a meme mocking Gary Gensler’s inaction on this matter.

DeFi
John Reed Stark
SEC
Uniswap

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