- Uniswap (UNI) has suffered a major setback with prices plummeting due to concerns that the U.S. SEC is taking legal action against the project.
- Whales are leading price action as some cash out leading to a market-wide panic that caused UNI to plummet 17%.
Uniswap (UNI) investors are in panic mode after it was revealed that U.S. regulatory bodies led by the SEC are preparing a lawsuit against the project. Confirmed by Uniswap Labs, the organization responsible for the development of the protocol, has received a Wells Notice that indicates the SEC intends to sue it.
Experts have pointed out that this is unchartered territory for the SEC. In the past, the regulatory body has gone after centralized organizations such as Coinbase and Kraken. Uniswap, being a decentralized cryptocurrency exchange was seemingly beyond the purview of the SEC. Similarly, the SEC issued a Wells Notice to Coinbase in the months before it filed a lawsuit indicating the SEC has every intention to go after the platform.
The details of the charges remain unclear but the development has sent jitters across the crypto market. Some speculate that the UNI token, intended to give users a say in how the protocol works, could potentially be seen as a security. Additionally, Uniswap Labs controls the main entry point to the Uniswap protocol.
Uniswap (UNI) Faces Price Volatility
Uniswap’s UNI has taken a nosedive, plummeting 15% in the last couple of days. This price move has been driven by panic led by whales who are cashing out. Lookonchain data shows that three major holders have offloaded a total of 2.03 million UNI tokens valued at nearly $20 million. This has further driven panic among retail traders. At the time of writing, UNI is trading for $9.07 with a weekly range of $8.96 – $11.78.
UNI is beginning to show price stability as experts offer clarity on the potential lawsuit against Uniswap. For starters, it has emerged that the SEC cannot come after protocol users and UNI investors. Furthermore, the decentralized finance (DeFi) platform said it is “ready to fight” the SEC and would be willing to go to court.
Previous cases can offer insights into the outcome of the potential lawsuit. Two things have been evident, cases with the SEC can take years as witnessed with the Rippe case. The second thing is that the SEC is open to settlements. This is evident with LBRY, a platform built as a decentralized alternative to YouTube, which settled in a fine. The regulator has also settled with some crypto exchanges.
This case suggests that the SEC is now eyeing the DeFi sector as it continues its regulatory overreach on crypto. Analysts have warned that the SEC has failed to protect investors as in the case of the FTX collapse but continues to enforce new rules and regulations. “The SEC is very imaginative in the ways that you can be violating their rules,” Bill Hughes, senior counsel and director of global regulatory matters at Consensys warns.
