The SEC is reportedly planning to take enforcement action against the decentralized exchange Uniswap, indicating an investigation has uncovered potential wrongdoing. However, as Wells notices, which notify recipients about possible enforcement actions, are not made public, only Uniswap is aware of the specific securities violations it is accused of. Laura Sanders, a policy counsel at the Blockchain Association, commented on the situation, noting that the SEC’s authority is explicitly limited to securities, which do not include tokens exchanged on secondary platforms like Uniswap. She referenced a recent ruling in SEC v. Coinbase, Inc., which dismissed the SEC’s claim that crypto wallets qualify as brokers, as an indication of the weakness of the SEC’s position.
Jake Chervinsky, the chief legal officer at Variant, echoed similar sentiments, suggesting that the SEC has stretched the law to justify expanding its reach beyond financial instruments meant to be securities. He expressed concern that there is still a lack of clarity on how securities laws apply to digital assets, and expressed hope for new legislation from Congress that makes sense for the crypto industry. Notably, since Uniswap’s infrastructure is decentralized, with no single individual or entity in control, it may be challenging for the SEC to shut it down. However, SEC Chair Gary Gensler seems to be skeptical of the DEX’s level of decentralization, suggesting a potential showdown ahead.
