UNI, the native token of Uniswap protocol, has entered a downtrend following the United States Securities and Exchange Commission (U.S. SEC) statement of intent to sue Uniswap Labs.
The largest Ethereum-based decentralized exchange (DEX) happens to be the next target in the SEC’s unending onslaught on crypto projects. While the charges in the potential lawsuit remain to be revealed by the SEC, the regulatory agency likely plans to sue Uniswap on claims of offering or facilitating the sales of “unregistered security tokens.” In particular, this has always been the pattern in most of the SEC’s lawsuits against crypto projects, including Binance, Ripple Labs, Kraken, Bittrex, Coinbase, etc.
SEC serves Uniswap Labs Wells notice.
On Wednesday, Uniswap Labs received a Wells notice from the Enforcement Division of the U.S SEC, as per an update from Uniswap protocol founder Hayden Adam. Notably, a Wells notice is a formal communication issued by the U.S. SEC to inform individuals or companies that it intends to bring an enforcement action against them. The official statement of intent allows the recipient to respond before formal charges are filed.
Responding to the Wells notice, Adam said Uniswap Labs is prepared to fight the U.S. government agency in court to protect its company and decentralized finance (DeFi). According to him, the products offered by Uniswap Labs are all legal and on the right side of history.
Overall, he added that the planned lawsuit from the SEC was not unexpected but annoying and disappointing, citing the agency’s clear unwillingness to set clear and informed crypto regulations. “I’m not surprised. Just annoyed, disappointed, and ready to fight,” the Uniswap founder wrote.
Acknowledging that the potential lawsuit will take years to conclude and likely reach the Supreme Court, Adam called on the entire crypto industry to back Uniswap Labs. It bears mentioning that Uniswap has made huge contributions to the DeFi industry by providing an entirely new, transparent and accessible financial infrastructure for users. Notably, the DeFi protocol has processed over $2 trillion in volume as of April 2024, cementing its position as the leading DEX.
Read Also: SEC Drops Charges Against Ripple Executives Over XRP: Details
UNI token faces turbulence, price enters a downtrend.
Despite the team’s assurance that its entire suite of current products will continue to be available in the meantime, investors seem to be losing confidence in UNI as happened to XRP in 2021. This is evident in the voluminous panic sales of the governance token which began hours after the SEC’s Wells notice announcement.
Trading at $9.24 at press time, the price of the 23rd-largest cryptocurrency by market cap is down over 16% in the last 24 hours and seven days. Coingecko data further shows that the UNI price has dropped over 34% in the past 30 days. Moreover, its market cap which was above $8.4B before Uniswap Labs received a Wells notice has dropped below $7B at the time of writing.
From the foregoing, UNI has entered a massive downtrend that may last for days, weeks or months. While the duration of the UNI price downtrend remains uncertain, recall that XRP and BNB prices suffered a prolonged downturn when Ripple and Binance were in a similar position with the U.S. SEC. However, the SEC has not sued Uniswap Labs at press time.
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