Uniswap plunges 20% after receiving warning of SEC lawsuit! Is now a good time to buy UNI at the bottom?

Uniswap, the leading decentralized exchange, suddenly received heavy news in the early morning of yesterday (11th). Its founder Hayden Adams posted on the social platform Commission (SEC) Wells Notice (Wells Notice), may face regulatory litigation.

UNI plunged 20.75% upon hearing the news

After the news was released, the Uniswap platform currency UNI quickly plunged from US$11.2 to a minimum of US$9.495 in a short period of time, a short-term drop of 15%. At the time of writing, it had dropped to $8.866, a drop of 20.75% in the past 24 hours.

Will I definitely be a defendant if I receive the SEC's Wells Notice?

However, it is worth noting that receiving the Wells Notice from the SEC does not necessarily mean that a formal lawsuit will be filed. Usually, the initiation process of the Wells Notice is:

1. A warning issued to an individual or business after a company investigation has concluded

2. After receiving a Wells Notice, the business will be given 30 days to rebut the charges and present arguments to prove its innocence

3 After submitting the notice, the SEC has 6 months to decide whether to file a complaint and take enforcement action

Which other encryption companies have received Wells Notices from the SEC?

• #Ripple Labs: In December 2020, the SEC accused Ripple and two of its executives of selling securities without registering, resulting in the immediate delisting of XRP from Coinbase. (SEC prosecutes)

• Coinbase: In March 2023, the SEC sent a Wells Notice to Coinbase. Coinbase’s stock price fell by more than 15% after the market closed, and protests continued. (SEC prosecuted in June)

• "Paxos", once the third largest stablecoin BUSD issuer, received a Wells notice in February 2023, and Paxos was terminated soon after Cooperation with Binance on BUSD. (The New York Department of Financial Services ordered Paxos to stop minting new BUSD)

Although receiving a Wells notice does not necessarily mean that you will be sued by the SEC, based on past experience, the SEC The probability of prosecution is not low, especially in the cryptocurrency field. Companies usually proceed to the stage of civil litigation, and the final result is often to settle and lose money.

Why did the SEC suddenly take heavy action?

As for why the SEC started targeting decentralized exchanges without warning, experts and Uniswap released the latest governance proposal in February, planning to allocate protocol fees proportionally to UNI tokens that have pledged and entrusted their voting rights. Holders are concerned (subsequently passed), which provides evidence for the SEC to determine that UNI tokens are securities.

The community is currently divided into two groups. Some people believe that the Uniswap technology ecosystem is decentralized enough, just like Bitcoin and Ethereum, and will not be classified as a security; some people think that UniSwap may It will be unable to operate because it cannot become an SEC-certified exchange, unless it is completely de-Americanized, including strict KYC, but this is very difficult.

The subsequent development deserves our continued attention. After all, this may be an important indicator affecting the development of the DeFi field.

Is now a good time to buy UNI at the bottom?

As for whether now is a good time to buy UNI at the bottom? We may refer to the situation of Ripple. Ripple was sued by the SEC in December 2020, accusing it of raising funds up to US$1.3 billion through "unregistered securities" and accusing Ripple CEO Brad Garlinghouse and co-founder Chris Larsen of privately selling XRP, with sales amounting to US$1.3 billion. $600 million later.

Ripple did not succumb to the SEC’s regulatory punch. While insisting on denying the accusation that XRP was a security, it also launched a legal battle with the SEC that lasted for several years and won three times. The currency price therefore Multiple rises:

• On July 13, 2023, a U.S. judge issued a summary judgment and determined that Ripple’s sale of XRP on the exchange did not constitute an investment contract and was not a security. Inspired by this, XRP once jumped by 36%;

• On October 4, 2023, a U.S. judge rejected the SEC’s request for an interlocutory appeal in the Ripple case, and XRP soared by 6%;

• On October 20, 2023, the SEC dropped all charges against Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen. Ripple Chief Legal Officer Stuart Alderoty said that this represented the SEC’s total surrender, and XRP once again Rising;

• At the moment of writing, XRP is trading at US$0.6094, which has increased more than three times compared to its low of US$0.1839 after being sued by the SEC at the end of December 2020.

Coincidentally, Coinbase, a US-listed exchange, was sued by the SEC in June last year, accusing it of being an unregistered securities dealer. However, Coinbase has continued to fight back and has received support from all parties many times. , although the lawsuit is still ongoing, its stock price continues to rise with the advent of the crypto bull market. At the moment of writing, COIN’s stock price is $256.46, up 2.18% in the past 24 hours, and has soared 265.41% in the past year. .

To sum up, the SEC’s prosecution does not necessarily mean that the defendant’s project will plummet or even return to zero. On the contrary, if there are clear positive signs in the lawsuit, it will also be expected to boost the price of the currency. Whether Uniswap will repeat the victory of Ripple and Coinbase in its confrontation with the SEC deserves our continued attention.

Finally, investors are reminded that legal proceedings are a long process, and coupled with the unpredictable market, investors should be cautious.

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