Uniswap Labs, the operator of one of the most popular DeFi platforms, could soon face action from the US Securities and Exchange Commission (SEC).

The company said on April 10 that it received a Wells notice from the SEC. The regulator intends to recommend legal action, according to the notice.

Uniswap said that for now, it will continue to offer its current selection of products and expressed confidence that those products are legal. Uniswap offers various crypto products and services, including a decentralized exchange (DEX) or token swap, a mobile wallet, and profit-generating liquidity pools.

Uniswap also criticized the SEC’s intentions on political grounds, calling the notice the “latest political effort to target even the best actors” in the blockchain sector.

Uniswap Plans to Fight

Uniswap said it plans to fight the expected lawsuit. The project laid out several specific legal points on which it can defend itself.

First, Uniswap asserted that the SEC lacks Congressional authority over secondary market transactions, including those that take place on its platform.

To this end, Uniswap cited the SEC’s earlier case against Ripple, where courts found that exchange sales of XRP were not securities. Uniswap also cited its own victory in a private case, which affirmed that Congress should address certain issues rather than the SEC. The need for Congressional lawmaking is further supported by SEC chair Gary Gensler’s own testimony, according to Uniswap.

Uniswap also asserted that its products do not meet the definition of a securities exchange or broker. To this end, Uniswap cited a ruling in the SEC’s ongoing case against Coinbase. Certain claims around Coinbase’s wallet have been dismissed, which could have implications for all of Uniswap’s products.

UNI Token Is Key Concern

Finally, Uniswap denied that its UNI token is a security and asserted the token does not meet the definition of an investment contract.

Uniswap more broadly denied that most cryptocurrency tokens are securities, contrary to the SEC’s claims. It compared UNI to Bitcoin (BTC) and Ethereum (ETH), which the SEC generally does not consider securities.

News of the lawsuit nevertheless coincided with losses for Uniswap’s UNI token. As of April 12, the price of UNI was down 41% over one week, with the most severe losses beginning at the time of the Wells notice. BTC, which provides a benchmark for the rest of the crypto market, was down just 6.5% over the same period.

It remains to be seen whether Uniswap’s position is defensible in court. The SEC has charged numerous other crypto companies and obtained an in-court victory or voluntary settlement, meaning that Uniswap is not guaranteed to succeed.