Uniswap received a Wells notice from the SEC, indicating a potential lawsuit.
This news caused the price of Uniswap's token, UNI, to drop by nearly 20%.
The SEC is considering taking action against Uniswap as part of a larger effort to regulate the crypto market.
Uniswap, so far, has argued that most tokens traded on their platform are not securities and are contesting the SEC's claims.
Despite the price drop, analysis shows that this might be a strong buying opportunity, with a target entry point around $8.27 or even lower.
In one of the biggest developments for Defi, Uniswap, the largest decentralized crypto trading platform has just been served a Wells notice by the US Securities and Exchange Commission (SEC).
What is a Wells notice? What does this mean for Uniswap, and is this why the price of $UNI has tanked so terribly?
Let’s find out.
So what is a Wells notice?
Simply put, a Wells notice is a letter sent to an organization, informing them that the SEC has found something on them, and is coming soon with legal action.
Think of it like a “we’re coming for you” letter from the SEC.
Under the leadership of the current SEC chairman, Gary Gensler has come after several companies and organizations within the crypto industry since 2020, most notable of which are Ripple, Binance and Coinbase.
Gensler has minced no words when referring to the crypto industry as the “Wild West”, in desperate need of strong regulatory control.
As it stands, the Wells notice to Uniswap comes as part of a larger enforcement action against the crypto market as a whole.
Uniswap’s founder and CEO, Hayden Adams took to Twitter as soon as the notice was served, to express his frustration with the whole ordeal in a lengthy tweet.
Adams emphasized that he was ready to defend his company’s interests, arguing that most of the tokens traded on Uniswap are stablecoins, utility tokens, and commodities like Bitcoin and Ethereum.
As such, all of these cryptocurrencies do not fall under the category of securities.
Hayden Adams annoyed by the SEC’s stance
Moreover, tokens are not inherently securities and Uniswap’s offerings are not only legal but also transformative for the industry.
“Despite SEC rhetoric that "most" tokens are securities, the reality is that tokens are a digital file format, like a PDF or spreadsheet, and can store many kinds of value. They are not intrinsically securities, just as every sheet of paper is not a stock certificate”
However, all of this hasn’t stopped the price of $UNI from tanking terribly over the last 24 hours.
Uniswap’s price
According to data from CoinMarketCap, the price of the cryptocurrency has dumped by nearly 20% over the last day, from around $11.3 to $9.25 where it now sits.
According to the charts, Uniswap is currently in the middle of what can only be described as a freefall, as shown below:
Uniswap’s price action
The cryptocurrency is currently underneath all of its major moving averages, and could likely trend lower.
While Uniswap is in a completely valid buy spot at any point from here, it might be better to wait and see what happens around $8.27 (which was the previous local high from late November last year).
Uniswap will likely trend lower, and attempt a rebound from $8.27, before making a 106% comeback to the $17 mark.
However, in the event that the $8.27 support fails to hold, investors can target an entry at around $5.55.
Overall, Uniswap's declining in price this close to the Bitcoin halving, means that an easy entry has presented itself.
However, going forward, investors are advised to approach with caution and proper research.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.