Uniswap Labs Escapes SEC Probe, Adding to Growing List of Ceases Crypto Investigations

The US Securities and Exchange Commission (SEC) has officially dropped its probe into Uniswap Labs, adding to its growing list of ceased crypto investigations.

The US Securities and Exchange Commission (SEC) has dropped its probe into Uniswap Labs, adding to its growing list of ceased crypto investigations.

The regulator's investigation has officially been closed and no action is forthcoming from the SEC, according to a statement from Uniswap on Tuesday.

The decision has been plauded by the wider decentralized finance (DeFi). community. Uniswap CEO Hayden Adams has long argued that TradFi regulations are inappropriate for the crypto industry and has advocated for new regulatory frameworks that better align with DeFi.

"This is a huge win, not just for Uniswap Labs but for DeFi as a whole. It reaffirms what we’ve said all along: that decentralized technology and self-custody are inherently different from the centralized, intermediated systems they aim to replace," Adams tweeted.

"Self-custodied funds, with self-executing code run on public blockchains, are a huge step forward in transparency for financial markets. Slapping regulations aimed at centralized, opaque TradFi markets on top of DeFi simply does not work."

Self-custodied funds, with self-executing code run on public blockchains, are a huge step forward in transparency for financial markets. Slapping regulations aimed at centralized, opaque TradFi markets on top of DeFi simply does not work.

This is a win for DeFi and reaffirms what we’ve always known – that the technology we build is on the right side of the law, and our work is on the right side of history.

We’re grateful to everyone who joined this fight. Thank you. https://t.co/yB6P7V877C

— Uniswap Labs (@UniswapLabs) August 28, 2024

Earlier this year, the SEC (under the previous admin) tried to claim that Uniswap Labs operated an unregistered broker, exchange, and clearing agency, and issued an unregistered security.

Those claims have now been dropped.

@Uniswap Labs is not a broker. The Uniswap Protocol is an unregistered security.

This time, the SEC's claims were weak and have been largely refuted by the courts.

"The SEC’s aggressive theories are an effort to expand its jurisdiction beyond exchanges to communications technology – and beyond securities to all markets," Uniswap said in a blog post.

A Wells Notice is usually sent ahead of launching a formal lawsuit. Coinbase, Uniswap Labs, Ripple, Robinhood, Consensys, and BUSD issuer Paxos are on the list of crypto firms that have received such notices.

Last week, the SEC closed its investigation into Robinhood without pursuing any enforcement action.

The regulator's Division of Enforcement informed the exchange on 21 February that it had concluded its probe, which commenced when the exchange received a Wells Notice in April.

The SEC's pullback comes as the regulator also revealed it is closing its investigation into OpenSea and is dropping its lawsuit against Coinbase.

OpenSea founder and CEO Devin Finzer made the announcement on X, describing it as a "win" and that the regulator's initial attempt to classify NFTs as securities "would have been a step backward—one that misinterprets the law and slows innovation."

Meanwhile, Coinbase's chief legal officer, Paul Grewal, said the SEC has agreed “in principle” to dismiss the lawsuit, which accused the exchange of failing to register as a securities platform. The SEC will now vote on dismissing the lawsuit at some point this week.