The token for the Uniswap decentralized exchange plunged to a six-week low after the company declared it had received a proposed lawsuit  from US regulators, but the company said it is “ready to fight.”

UNI fell 10% in one hour, from $11.21 to $10, following Uniswap saying that it had gotten a Wells Notice from the Securities and Exchange Commission, informing it that the regulator was considering taking enforcement action.

At the time of writing, UNI is currently trading at $9.44, its lowest point since late February, according to CoinMarketCap. 

Hayden Adams, the founder of the New York-based Uniswap Labs, posted on the X on April 10, “I’m not surprised. Just annoyed, disappointed, and ready to fight.” He continued, “This fight will take years, may go all the way to the Supreme Court, and the future of financial technology and our industry hangs in the balance. If we stand together we can win.”

In a blog post about the Wells Notice, Uniswap asserted that UNI was not a security and did not fit the legal definitions of a broker or securities exchange in the United States. However, the company did not disclose the precise contents of the Wells notice.

Bill Hughes, senior counsel at Consensys and director of regulatory matters, clarified in a post on X that SEC staff must first obtain approval for the lawsuit from all five of the agency’s commissioners, including chair Gary Gensler.

Hughe said, “Now, we all know that the Chair wants to sue them, and two commissioners are NOT going to disagree, and two will disagree, so a suit is a foregone conclusion, but there isn’t a suit yet.”

John Reed Stark, the former head of the SEC’s internet enforcement division, wrote on X that a Wells notice provides the recipient with a chance to explain why the commissioners ought to reject a suggested lawsuit.

He wrote, “Any SEC lawyer will agree that responding to a Wells by berating the SEC, calling them names, etc. is a weak, risky and losing strategy.” Stark asserted that by accusing the SEC of abusing its authority and “lambasting the SEC’s ‘anti-innovative enforcement paradigm,'” Uniswap was renouncing a “tired, anemic, old and failed monologue.”

He added, “Expect the SEC Enforcement staff to lean in and file a voluminous and robust federal complaint, which will inevitably survive the usual motion to dismiss, prevail against the typical motion for summary judgement and win on just about every other litigated issue that follows.”

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