A host of crypto VC funds have received letters from the US Securities and Exchange Commission [SEC] inquiring about their association with decentralized crypto exchange Uniswap.
Citing unnamed sources familiar with the matter, a recent report highlighted that Andreessen Horowitz [a16z] and Union Square Ventures [USV]were among the ones targeted.
Here, it is worth recalling that the agency served Uniswap with a Wells Notice earlier this year, indicating that it intended to pursue enforcement action against it.
The apex regulator alleged that the Uniswap protocol was an unregistered securities exchange and branded its interface and wallet as an unregistered securities broker.
The security-not-a-security debate has plagued US investors for more than a handful of years now. In fact, this was the basis against which the agency sued Ripple Labs and several other centralized exchanges like Coinbase and Binance for dealing with unregistered securities.
The latest report underlined,
“A bit of irony is that Uniswap is less vertically integrated than is SEC bete noire Coinbase, in that it's not really the broker… Even if Uniswap Labs was shut down as a company, the actual Uniswap products would keep running.”
In its response to the Well Notice, Uniswap Labs’ lawyers contended that the protocol did not meet the definition of an exchange and is thus not subject to regulation by the SEC.
They further brought to light that even though Uniswap Labs invented the protocol, it has since become a “passive” technology that people use to trade crypto assets.
Meanwhile, when Consensys netted its 'Ethereum 2.0' win in mid-June, Hayden Adams, the creator of Uniswap exclaimed, “Okay cool, Uniswap next please. Not too late to make the right decision here!”
