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SEC Moves to Sue Uniswap; Early Ethereum Advisor Sues US Government

Uniswap has been issued with a Wells Notice from the SEC while the US government is facing a $9.6 billion lawsuit from early Ethereum advisor Steven Nerayoff

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Opportunity is abundant in crypto but so are lawsuits. As always, the US Securities and Exchange Commission (SEC) is busying itself with dishing out lawsuits but the US government has also found itself on the receiving end of one.

On Wednesday, the SEC told Uniswap it is taking legal action against the firm. Meanwhile, a former Ethereum advisor, Steven Nerayoff, has filed a $9.6 billion lawsuit against the government.


In a blog, Uniswap Labs said the SEC has issued a warning against the firm in the form of a Wells Notice, which is usually sent ahead of launching a formal lawsuit. Coinbase and BUSD issuer Paxos are among the increasing list of crypto firms that have received such notices.

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The reasons behind the SEC's warning are not clear but Uniswap has been under the regulator's microscope for quite some time. In the blog post, Uniswap refutes the SEC's definition of a token as a security.

"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," Uniswap states. "They are not intrinsically securities, just as every sheet of paper is not a stock certificate. The overwhelming volume of traded tokens are definitively not securities – they are stablecoins, community and utility tokens, and commodities like Ethereum and Bitcoin.

"And tokens traded on secondary markets like Uniswap are not investment contracts. In the circumstance where a token may represent a security, the SEC has refused to create a path for businesses to register."

Uniswap pointed towards the SEC's battle with Coinbase as part of its defence. Taking into account the SEC's ongoing lawsuits against Coinbase and others as well as their complete unwillingness to provide clarity or a path to registration to those operating lawfully within the U.S., we can only conclude that this is the latest political effort to target even the best actors building technology on blockchains," it stated.

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The US vs. the ETH

While the SEC is deliberating about whether the US is ready for an ETH ETF, the American government is facing challenges from the Ethereum community.

Steven Nerayoff, who once branded himself as a "co-creator" of Ethereum, was an early advisor to the network in its formative days. He now serves as the founder of blockchain consulting firm, Alchemist.

In 2019, Nerayoff was arrested in 2019 on extortion charges amounting to 10,000 ETH from a crypto startup. His lawyers are now claiming he was framed by the FBI which "maliciously" investigated and prosecuted him.

The lawsuit states that as part of a  “collective and concerted fishing expedition,” government agents arrested Nerayoff on charges that were “factually and legally baseless.”

“Federal agents and officers… launched an unhinged and unlawful, four-year campaign against Mr. Nerayoff,” lawyers said in the complaint.

Nerayoff claims that he was arrested on 17 September 2019 by a dozen gun-wielding FBI agents and was interrogated for hours in an unmarked van outside his home. Agents allegedly told him that he would “not see his young minor children grow old” unless handed over the information they demanded.

Close to $10 billion is now being sought after by Nerayoff lawyers, which they claim represents the losses he incurred due to damage to his reputation.