Under Gary Gensler’s leadership, crypto and DeFi protocols, including Uniswap (UNI), faced intense scrutiny. Centralized exchanges like Binance, Kraken, and Coinbase were targeted first and incurred hefty lawsuits.
The SEC claimed these entities facilitated unregistered securities trading and sometimes facilitated money laundering. Binance resolved issues by settling for over $4 billion, resulting in the resignation of CEO Changpeng Zhao, while others like Coinbase chose to defend their position.
On February 25, the SEC officially closed its probe into Uniswap, one of the foremost DeFi platforms, deciding not to pursue enforcement action. This recognition marks a significant triumph for DeFi, affirming that the decentralized exchange operates lawfully.
This victory could enhance UNI’s status as a top crypto in 2025. Yet, this favorable outcome arrives during turbulent market conditions, as UNI has faced considerable downward pressure.
Uniswap’s Victory Over the SEC: DEX Markets Clear?
The SEC began investigating Uniswap in 2021, intensifying with a Wells notice in April 2024, signaling an intent to litigate. However, the SEC’s claims that Uniswap was illegally operating and engaged in unregistered broker activities have now been invalidated.
Uniswap Labs argued that its protocol, driven by self-executing smart contracts on public ledgers such as Ethereum and BNB Chain, could not fall under the SEC’s categorization. The decentralized nature of its operations counters the agency’s arguments.
As anticipated, the well-noted notice ignited discussions within the industry. Hayden Adams expressed readiness to defend Uniswap vigorously, criticizing the SEC for prioritizing legitimate projects while disregarding outright frauds like FTX.
The collapse of FTX in late 2022 had already pushed crypto prices down markedly, contributing to Bitcoin trading under $16,000.
Following extensive pushback, including a 40-page counter from Uniswap, the SEC retracted its case, confirming that Uniswap operates outside its regulatory reach—a success for the protocol and the broader crypto industry.
Uniswap now seeks to engage with regulators to develop reasonable guidelines that reflect the nature of DeFi technologies.
Timing Concerns? UNI Price Expected to Drop Below $7
Though this structural victory for Uniswap is pivotal, it coincides with a challenging market phase marked by declining prices. The total crypto market cap is down 4%, hovering around $2.95 trillion.
Bitcoin is nearing $90,000, while UNI, the governance token for Uniswap, is facing significant downturns, receding to early November 2024 values. With most gains from Q4 2024 erased, UNI risks declining below $7 soon.
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Key Takeaways:
- The SEC dismisses the case against Uniswap.
- Is this a milestone for DeFi?
- UNI’s price struggles in the current market context.
