The Securities and Exchange Commission (SEC) of the United States is allegedly looking into the investigation report that mentions Uniswap Labs, the developer of the largest decentralized exchange, Uniswap.
According to a story published Friday morning by the Wall Street Journal, DeFi behemoth Uniswap Labs is looking into the investigation report that mentions Uniswap token and will face an inquiry from the US Securities and Exchange Commission.
According to unnamed sources, SEC attorneys are interested in learning how investors utilize Uniswap and how the exchange is marketed.
As a result, a Uniswap Labs spokesperson informed the Wall Street Journal:
“Uniswap is dedicated to adhering to the rules and regulations that govern our sector, as well as providing regulators with information that will assist them with any inquiry.”
UNI, the exchange's governance token, has dropped more than 6% in response to the announcement.
However, the inquiry against Uniswap Labs appears to be in its early stages, and no official charges of misconduct appear to have been made.
Since taking office as chairman of the Securities and Exchange Commission in April, Gary Gensler has repeatedly expressed his worries about the lack of oversight in decentralized finance.
Previously, Gensler expressed concern about the alarming trend of "gamification" in investing, citing applications like Robinhood as fuelling the "meme stock" problem earlier this year.
Because investigators are allegedly interested in how Uniswap is promoted, Gensler may be addressing the matter via the lens of gamification.
Earlier this week, Gensler reaffirmed his position on DeFi protocols, claiming that many seemingly decentralized platforms had “a good bit of centralization,” mentioning governance structures, pricing models, and incentive systems as examples.
The SEC is becoming more active in regulating the crypto sector.
The SEC has sued BitConnect creator Satish Kumbhani in a new legal filing this week, after developments in the regulator's ongoing action against Ripple.
In the face of growing regulatory scrutiny, Uniswap Labs has not been inactive. The exchange delisted over 100 coins in July, raising concerns about the platform's decentralization.
Many of the delisted tokens were synthetic assets or tokenized equities, which are products that might be classed as securities by the SEC.
Since the introduction of V1 in November 2018, Uniswap has expanded at a rapid pace.
The system enabled over $53 billion in trade volume in August, with users holding $5.2 billion in assets to provide liquidity.