Uniswap founder Hayden Adams announced this morning that he has received a Wells Notice from the SEC and is facing potential litigation. UNI plummeted by 15% upon hearing the news.
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Leading decentralized exchange Uniswap received significant negative news this morning, as founder Hayden Adams posted on Twitter that he has received a Wells Notice from the SEC and is facing potential litigation.
UNI dropped by 15% as soon as the news broke, falling from $11.2 to a low of $9.495 at the time of writing, within six hours.
What is a Wells Notice?
A Wells Notice typically refers to a notice issued by the SEC to individuals or companies after an investigation, indicating that the SEC believes they may have violated securities laws. After issuing the notice, the SEC has six months to decide whether to file a lawsuit and take enforcement action. Companies that receive a notice from the SEC also have the right to respond and provide explanations.
Just last March, Coinbase, the largest cryptocurrency exchange in the United States, also received a Wells Notice from the SEC, causing a significant drop of over 15% in Coinbase’s stock price after hours.
Faced with the imminent SEC enforcement, Coinbase stated in a declaration at the time that the SEC’s regulatory position was unclear, leaving cryptocurrency companies unsure about how to proceed. The sudden and threatening enforcement action was deemed meaningless and Coinbase filed a lawsuit against the SEC in federal court, requesting a clear response to a petition for the SEC to provide guidance to the cryptocurrency industry by using its formal rulemaking process by July 2022.
Coinbase’s Chief Legal Officer Paul Grewal stated at the time that the company had submitted multiple proposals regarding registration to the SEC over the course of several months, but all proposals were ultimately rejected or left unanswered by the SEC, resulting in the Wells Notice.
Regardless of whether the SEC ultimately decides to file a lawsuit against Uniswap, this action has undoubtedly cast a shadow over the development of the DeFi industry.
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