SEC Under Fire: Analyst Takes on Uniswap Case
The United States Securities and Exchange Commission (SEC) is facing scrutiny over its recent move against decentralized crypto exchange Uniswap, with legal expert Adam Cochran of Cinneamhain Ventures highlighting what he sees as contradictions in the regulator’s own policies.
In a comprehensive analysis published on X, Cochran referenced past decisions by the SEC regarding the definition of an exchange and its implications for Uniswap’s potential legal battle.
According to Cochran, the SEC has previously issued “No-Action Letters” in 1986, 1991, and 1997 to provide guidance to entities exploring electronic trade routing and matching systems. These entities were concerned that such systems might classify them as exchanges. However, the SEC concluded that merely providing a system for routing and matching trades electronically did not meet the comprehensive definition of an exchange.
Another point of contention, Cochran noted, is the classification of front ends as exchanges. Citing SEC guidance from letters in 1989 and 1990, he explained that interfaces facilitating communication with an exchange were not considered exchanges themselves.
Moreover, Cochran highlighted a 1998 SEC declaration (SEC No-Act. LEXIS 18) indicating that the Commission would no longer respond to No-Action Letter requests, suggesting a settled matter.
The analysis also delved into the distinction between connecting buyers and sellers and the legal transfer of assets, a concept emphasized by the SEC in 1979, 1996, and 1999. Cochran argued that while platforms like Uniswap facilitate transactions between buyers and sellers, they do not directly handle the settlement, which occurs elsewhere.
Addressing Uniswap’s case specifically, the analyst reiterated the platform’s claim that its frontend development is separate from the protocol itself. This separation, he argued, is evident in the ability to execute trades on the Uniswap smart contract through various interfaces beyond the official frontend.
Uniswap, known for enabling automated token exchanges on the Ethereum blockchain, received a Wells notice from the SEC on April 10, indicating potential enforcement action. Despite regulatory scrutiny since 2021, Uniswap Labs, the platform’s main developer, maintains that it is only responsible for the frontend, distinct from the autonomous protocol.
Cochran’s analysis adds weight to Uniswap’s assertions, suggesting a legal distinction between the frontend interface and the underlying protocol, which could have implications for the ongoing regulatory scrutiny facing decentralized exchanges like Uniswap.
