Uniswap hits $2 trillion in trading volume ahead of SEC’s lawsuit

Decentralized finance (DeFi) exchange Uniswap crossed $2 trillion in total trading volume despite escalating competition from other networks and regulatory setback.

The milestone comes even as the platform faces increased scrutiny from regulators. On April 10, Uniswap was formally notified by the Securities and Exchange Commission (SEC) of impending legal action, according to the protocol’s founder Hayden Adams.

Unlike many DeFi platforms that have limited U.S. users’ access due to regulatory concerns, Uniswap has continued to allow unrestricted access. Uniswap Labs, which supports the platform, says that it merely facilitates access to decentralized smart contracts, rather than operating a traditional exchange.

Following the SEC notice, the value of Uniswap’s governance token dropped from over $11 to below $9. Nonetheless, a February proposal to reward token holders has kept the token up 23% year-to-date as of last Friday, despite recent market fluctuations.

Additionally, Uniswap’s daily trading volumes have consistently hit the $3 billion mark recently, and the platform raised its transaction fees from 0.15% to 0.25% following the SEC notice.

The SEC’s move was signaled through a Wells Notice  and it comes amidst the ongoing regulatory scrutiny facing the DeFi sector, often described by the SEC chairman as the industry’s “Wild West.”

Uniswap CEO Hayden Adams disclosed the receipt of the Wells notice via X, highlighting his reaction to the SEC’s impending action. “Not surprised, just annoyed, disappointed, and ready to fight,” Adams wrote.

“It’s been clear for a while that rather than working to create clear, informed rules, the SEC has decided to focus on attacking long-time good actors like Uniswap and Coinbase,” he stated.

Uniswap stands as the leading decentralized exchange (DEX) when it comes to daily trading volumes, holding a 22.5% market share. This surge in regulatory scrutiny arrives shortly after a comparable subpoena was sent to Uniswap’s competitor, SushiSwap, indicating an ongoing trend of increased regulatory attention on decentralized trading platforms.

The SEC has had its eye on the leading Ethereum decentralized exchange (DEX) for quite some time. Back in September 2021, the Wall Street Journal revealed that the regulator started digging into Uniswap Labs. They were curious about how this exchange lets users trade directly with each other, bypassing traditional middlemen, and also how it’s been pitched to American investors.

A Wells notice is a procedural step by the SEC indicating its staff’s recommendation for enforcement action and offers the notice’s recipient a chance to argue against the proposed charges. This recent action against Uniswap follows a series of similar warnings and legal actions pursued by the SEC against major crypto exchanges, including Coinbase and Binance.