Uniswap vs SEC: A New Frontier in the Fight for Digital Freedom!

The Securities and Exchange Commission’s (SEC) ongoing efforts to regulate the cryptocurrency industry have met with fresh opposition. This time, it’s from Uniswap Labs, one of the leading developers in the field of Decentralized Finance (DeFi).

The SEC is trying to change the legal definition of “exchange” as part of their ongoing effort to shut down crypto & decentralized finance. We joined others in submitting arguments against this effort. 1/4 https://t.co/KMa4uQEP2G

— Marvin Ammori (@ammori) June 14, 2023

Uniswap vs SEC- The battle begins

In a recent tweet, Ammori claimed that the SEC is trying to force DeFi developers out of the US. He believes this is part of a larger trend where the SEC is pushing for traditional financial firms to gain an edge over new crypto-based competitors.

Assisted by Donald Verrilli, one of the world’s top lawyers, Uniswap has presented a case suggesting that the SEC’s proposed changes violate securities laws, the Constitution, and administrative law. Ammori asserts that the SEC’s definition extends beyond any reasonable meaning, breaches the separation of powers doctrine, and even has the potential to provide traditional financial services firms with an unfair competitive edge over new market entrants.

In a letter to Vanessa Countryman, Secretary of the SEC, Verrilli on behalf of Uniswap, pointed out the wide-reaching implications of the proposal. He claimed that the proposal could be interpreted so broadly that it could cover almost any technology that facilitates communication, even including applications like email or WhatsApp.

Potential Violations Identified

Verrilli detailed several areas where the SEC’s proposed changes could be unlawful. He outlined a belief that the SEC was incorrectly asserting its jurisdiction over DeFi protocols designed for non-securities transactions, and suggested that the Commission’s proposed interpretation of the Exchange Act is unconstitutional.

Moreover, he argued that the regulatory authority the SEC was claiming in its proposal violated the separation of powers principle. The proposed rule, according to Verrilli, failed to provide regulated parties with fair notice, potentially violating the Due Process Clause. Finally, he noted that the SEC has not sufficiently justified the proposal’s impact on competition or provided adequate responses to significant comments on the issue.