Uniswap Labs Offers Response to SEC Wells Notice, Refutes Classification of Crypto Tokens as Securities

Uniswap Labs, the company behind Ethereum’s largest decentralized trading platform, has submitted a 40-page filing to the SEC in response to a Wells notice it received a few weeks ago. The filing strongly denies the accusation that Uniswap runs an unregistered exchange and broker dealer. Uniswap argues that crypto tokens should be treated as digital files, similar to PDFs, and not securities. Uniswap’s Chief Legal Officer, Martin Ammori, stated that the SEC would need to redefine the concept of an exchange in order to establish jurisdiction over Uniswap. The SEC Chairman, Gary Gensler, believes that decentralized exchanges do not truly operate in a decentralized manner and fall under the regulator’s jurisdiction. Uniswap argues that its UNI tokens and LP tokens should not be classified as securities. LP tokens are unique tokens acquired by users when they invest in a Uniswap pool. Uniswap Labs claims that LP tokens are not investment contracts and should be considered “bookkeeping devices” rather than securities. In April, Consensys filed a lawsuit against the SEC, alleging that the regulator had overstepped its authority. The SEC’s upcoming enforcement action against Uniswap Labs targets both UNI tokens and LP tokens. The SEC claims that LP tokens are investment contracts that violate securities laws, while Uniswap Labs argues that they do not fit into the regulator’s frameworks.