Uniswap Token Hits SEC Investigation Report


Key points to remember

  • Uniswap will face an investigation by the United States Securities and Exchange Commission.
  • The UNI token has fallen more than 6% on the news and could drop further.
  • SEC Chairman Gary Gensler has repeatedly commented on the lack of regulation in DeFi.

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The United States Securities and Exchange Commission (SEC) is reportedly investigating Uniswap Labs, the developer of the largest decentralized exchange Uniswap.

Uniswap under investigation

DeFi giant Uniswap Labs will face an investigation by the United States Securities and Exchange Commission, according to a report published by the Wall Street Journal Friday morning.

Anonymous sources have revealed that SEC lawyers are seeking information on how investors are using Uniswap and how the exchange is traded.

In response, a representative from Uniswap Labs told the Wall Street Journal:

“[Uniswap is] committed to complying with laws and regulations governing our industry and providing information to regulators that will assist them in any investigation.

The exchange’s governance token, UNI, has reacted negatively to the news, falling more than 6% so far. However, tThe Uniswap Labs investigation appears to be in its early stages and may not produce formal allegations of wrongdoing.

SEC Chairman Gary Gensler has frequently voiced concerns about the lack of regulation of decentralized finance since his appointment as head of the organization in April.

Previously, Gensler had commented on the disturbing trend towards “gamification” in investing, citing apps like Robinhood as fueling the “same stock” phenomenon earlier this year. Since investigators would be interested in how Uniswap is being marketed, Gensler might approach the problem from a gamification perspective as well.

Earlier this week, Gensler reiterated its position on DeFi protocols, saying that many supposedly decentralized platforms have “a fair amount of centralization,” citing governance mechanisms, fee models and incentive systems.

The SEC has become increasingly involved in regulating the crypto space. Following developments in the regulator’s ongoing case against Ripple, the SEC also sued BitConnect founder Satish Kumbhani in a new legal case this week.

Uniswap Labs has not been idle in the face of increasing regulatory pressure. In July, the exchange removed more than 100 tokens, raising questions about the decentralization of the platform. Many written off tokens were synthetic assets or tokenized stocks, instruments with a high risk of being classified as securities by the SEC.

Uniswap has grown exponentially since its V1 release in November 2018. In August, the protocol ease over $ 53 billion in transaction volume, with users locking in $ 5.2 billion in assets to provide liquidity.

Disclaimer: At the time of writing this feature, the author owned BTC, ETH, and several other cryptocurrencies.

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