Uniswap fights back against SEC Wells notice.
The SEC's enforcement actions this year have increasingly focused on ethereum and players working in decentralized finance.
"The SEC has to essentially unilaterally change the definitions of exchange, broker, and investment contract in order to try to capture what we do,“ continued Ammori.A Wells notice is typically one of the final steps before the SEC formally issues charges. It generally lays out the framework of the regulatory argument and offers the potentially accused an opportunity to rebut the SEC's claims.
The recent spate of actions targeting major names working in the ethereum ecosystem come ahead of a long-awaited decision on whether the regulator will approve or deny applications to launch spot ether exchange-traded funds. "If the SEC, in fact, does take the position that ethereum is a security, pretty much everyone in this business that is using or providing services on the ethereum blockchain, they're going to be on notice that they might need to be registered," said digital assets attorney Christopher Gerold, who previously served as the chief of the New Jersey Bureau of Securities.
Brookover says the agency has explicitly asked for the identities of public and private Consensys software developer code repositories. "They're going to be hard pressed not to stay in their answer whether they think ethereum is a security or not," said Gerold, adding that he suspects that the agency will take the position that it is a security because of the proof-of-stake change that took effect two years ago.
In April 2023, when Rep. Patrick McHenry asked SEC Chair Gary Gensler whether ether was a commodity or a security, Gensler demurred.Gensler has, in multiple interviews, repeatedly shared that he believes much of the industry already belongs under its jurisdiction, and its lawsuits are simply bringing the industry under compliance. Crypto firms argue that the recent legal battles haven't given the regulatory clarity the industry has been seeking for years.
"The SEC is arguing that the Uniswap protocol is an unregistered securities exchange, and that the Uniswap interface and wallet are both unregistered broker brokers," Ammori said. "It's not run by a group, as the definition requires, but as autonomous software no person or group controls," added Ammori.
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