roundedCompiled by Yangz, Techub News Today, Uniswap Labs received a notice from Wells of the Enforcement Division of the U.S. Securities and Exchange Commission (SEC), stating that it plans to take legal action against it. Affected by this, UNI has fallen by nearly 15% in 24 hours. In fact, as early as April 2022, Uniswap's developers and investors were sued by investors for failing to register in accordance with the U.S. federal securities law and for illegally "listing fraudulent tokens" that caused investors losses. However, the lawsuit ended with Uniswap winning the case. The reason is that the real defendant in the case should be the issuer of the "fraudulent tokens", not the developers and investors of the Uniswap protocol. Under current U.S. securities laws, Uniswap should not be liable for any damages caused by the use of the protocol by third parties. So, what is the purpose of the U.S. SEC's "offensive" this time? Is it a counterattack that failed last time, or is there a new trend in supervision? Like last time, Uniswap also faced the "challenge" this time and responded with a post "Fighting for DeFi". Today, Uniswap Labs received a Wells Notice from the SEC’s Division of Enforcement notifying us that they plan to take legal action against us. In the interim, we will continue to offer our full suite of existing products and deliver new products. Given the SEC’s ongoing lawsuits against Coinbase and others, and their complete unwillingness to provide clear information or a path to registration for companies operating legally in the United States, we can only conclude that this is the latest political tactic against actors intent on building technology on the blockchain.   Despite the SEC’s claims that “most” tokens are securities, the reality is that tokens are a digital file format, like a PDF or a spreadsheet, that can store a variety of values. They are not securities per se, just as every piece of paper is not a stock. The vast majority of tokens traded are not securities, they are stablecoins, community and utility tokens, and commodities like Ethereum and Bitcoin. Tokens traded on secondary markets like Uniswap are not investment contracts either. Even in cases where tokens may represent securities, the SEC refuses to clear a path for businesses to register.We firmly believe that the products we offer are not only legal, but also transformative. These products lower barriers to entry by building transparent, verifiable markets, making it easy and affordable for people to participate in global economic activities. Who We Are Uniswap Labs is a software company based in New York, USA. Our founder and CEO Hayden Adams created the Uniswap protocol in an attempt to build a software that reflects the advantages of the decentralized Ethereum blockchain. These advantages include core functions that cannot be changed, access rights that cannot be restricted, and no single or centralized control point. The Uniswap protocol brings unprecedented innovation to market structure: transparent execution; shared infrastructure based on open source code rather than "walled gardens"; self-holding assets rather than entrusting them to institutions that may mismanage them; direct, fully automated transactions without (often monopolistic) middlemen. In addition, through the Uniswap protocol's automatic market maker, anyone can create markets for assets with limited liquidity that cannot exist in traditional structures or with traditional intermediaries. Six years ago, the function of automatic market makers only existed in theory. Now, the Uniswap protocol has been widely adopted in the cryptocurrency field and has become an important infrastructure for blockchain markets. It is Ethereum’s largest use case, using 25% of Ethereum’s block space. The Uniswap protocol has processed $2 trillion in transactions and has never been hacked. It is integrated into thousands of applications built by teams around the world and is the most cited open source smart contract protocol with over 2,000 citations.   Uniswap Labs has created a popular consumer exchange built entirely on the blockchain. Our mobile app lets users custody their assets, like a personal safe on the blockchain that only the owner can access. Our website lets users buy or sell tokens securely.   We do all this work because we believe blockchain can provide consumers in the United States and around the world with more choice and control over their assets. We think it’s worth fighting for.If the SEC protects opaque systems and attacks transparent new technologies that bring opportunity and lower costs to Americans, the United States will fall behind in innovation that provides consumers with choice and freedom. We are disappointed that we may have to fight against U.S. government agencies to protect innovation and economic freedom.   Clear Legal Basis   Whatever the SEC decides to do, the law is clear on these points:   Congressional Unauthorized: The SEC only has jurisdiction over securities, such as assets that are legally classified as “investment contracts.” The court decision in the SEC v. Ripple case made it clear that secondary market transactions in digital assets generally do not constitute investment contracts. And these are exactly the vast majority of assets traded on the Uniswap protocol. The SEC Chairman even admitted in congressional testimony that new regulation of tokens would require Congress to pass a new law, which means that the SEC does not have this power. Our decisive victory in Risley v. Uniswap Labs emphasized the need for Congress, not the SEC, to develop cryptocurrency regulation, that securities law issues related to private plaintiffs are “best left to Congress.” Moreover, the SEC’s recent decision to settle with Shapeshift only on the issue of traders completely ignores the fact that they are also a DEX. This clearly demonstrates the casualness of its enforcement, which is only possible when the agency’s behavior is separated from the constraints of specific laws.   No stock exchange or broker’s argument: Even if the ruling against Ripple and the Supreme Court’s Howey test fail to reject the SEC’s arguments, the Uniswap protocol, web application, and wallet still do not meet the legal definition of a stock exchange or broker. This is clearly reflected in the recent SEC’s decision in the Coinbase case, where the court rejected the SEC’s claim that cryptocurrency wallets are brokers even if they charge fees at the earliest stages of the case. Moreover, the SEC seems to know that their existing legal definition does not have provisions for self-regulatory on-chain decision-making, which is why the agency proposed new exchange rules last year to try to cover this activity. These rules have not yet been introduced, and we have also explained why these rules will be rejected even if they are passed.No Securities Issued: The UNI token is not a security because it does not meet the legal definition of any type of security, including the definition of an “investment contract.” Under U.S. law and the established Howey test, an investment contract has three characteristics: the investment of funds into a common enterprise with the expectation of profit and reliance entirely on the efforts of others. There is no contract or commitment between Uniswap Labs and its 300,000+ token holders. There is no common enterprise, and the value of the tokens does not depend entirely on the efforts of Uniswap Labs. Although the SEC recently seized power from other agencies and investigated the Ethereum Foundation, the CFTC has been very clear that neither Bitcoin nor Ethereum is a security. And the Uniswap technology ecosystem, like Bitcoin and Ethereum, is fully decentralized. We firmly believe that our products are on the right side of the law and our work is on the right side of history. While our legal team fights this battle, we will continue to do what we do best: build.

#SEC #DeFi