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Uniswap Labs Urges SEC to Drop DeFi Proposal, Citing Supreme Court Decision

Uniswap Foundation

Citing a recent Supreme Court decision, Uniswap Labs, the inventor of the Uniswap distributed exchange, has renewed its appeal to the U.S. Securities and Exchange Commission (SEC) to reject their plan to control decentralized finance (DeFi).

Under the Exchange Act of 1934, the SEC has worked to widen the definition of an exchange to include DeFi crypto market players starting in April 2023 Uniswap has often resisted this action.

Impact of the Chevron Decision

Following its comment letter from last month, Uniswap offered further reasons in a July 9 letter asking the SEC to revoke its planned changes. On June 28 the corporation cited the Chevron ruling from the Loper Bright Enterprises v. Raimondo Supreme Court case. This decision suggests that courts no longer have to follow government agencies’ interpretation of unclear statutes.

Uniswap contends that the SEC’s attempts to redefine “exchange” would squander “limited resources” and encounter strong legal challenges. Uniswap said the SEC’s reading of the Exchange Act stretched the legislative language too far even before the Chevron ruling.

Uniswap said, “if the Commission moves forward with its proposed amendments, a reviewing court […] is certain to conclude that the Commission’s interpretation of the Exchange Act stretches the statutory text too far.”

Broad and Ambiguous Amendments

Uniswap further argues that the proposed amendment has vague limits, which would cause possible contradictions and inadequate direction. This would need constant case-by- case litigation.

For all these reasons, the Commission should not adopt the proposed amendments,” Uniswap stated. “The Commission developed the suggested changes against a legal environment that no longer exists.

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Should the SEC continue with the changes, Uniswap advises opening the comment period to provide public review of the most recent Chevron ruling.

SEC’s Enforcement Action

The Securities and Exchange Commission (SEC) sent Uniswap a Wells notice in April suggesting agency recommendation of enforcement action. A month later, Uniswap responded in a blog post, calling the SEC’s legal claims “weak” and stating ready to challenge the case in court should required.

The recent claims of Uniswap and the wider consequences of the Chevron ruling draw attention to the continuous conflict between regulatory authorities and the changing DeFi scene.

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