• The Uniswap Token Drops in the SEC Investigation Report

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

    Uniswap is being investigated.

    According to a report published Friday morning, DeFi behemoth Uniswap Labs will face an investigation by the US Securities and Exchange Commission.

    According to unnamed sources, SEC attorneys are looking for information on how investors use Uniswap and how the exchange is marketed.

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

    “[Uniswap is] committed to complying with the laws and regulations that govern our industry, as well as providing regulators with information that will assist them with any inquiry.”

    The exchange’s governance token, UNI, has dropped more than 6% in response to the news. The investigation into Uniswap Labs, on the other hand, appears to be in its early stages and may not result in any formal allegations of wrongdoing.

    Since being appointed chair of the SEC in April, Gary Gensler has frequently expressed his concerns about the lack of regulation in decentralized finance.

    Previously, Gensler expressed concern about the worrying trend of “gamification” in investing, citing apps like Robinhood as fueling the “meme stock” phenomenon earlier this year. Because investigators are reportedly interested in how Uniswap is marketed, Gensler may be approaching the issue through the lens of gamification.

    Earlier this week, Gensler reaffirmed his position on DeFi protocols, claiming that many ostensibly decentralized platforms have “a fair amount of centralization,” citing governance mechanisms, fee models, and incentive systems as examples.

    The SEC is becoming more involved in regulating the crypto space. The SEC has sued BitConnect founder Satish Kumbhani in a new legal filing this week, following developments in the regulator’s ongoing case against Ripple.

    Uniswap Labs has not been idle in the face of mounting regulatory pressure. The exchange delisted over 100 tokens in July, raising concerns about the platform’s decentralization. Many of the delisted tokens were synthetic assets or tokenized stocks, which are instruments that could be classified as securities by the SEC.

    Since the release of V1 in November 2018, Uniswap has grown at an exponential rate. The protocol facilitated more than $53 billion in trading volume in August, with users locking in $5.2 billion in assets to provide liquidity.

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