The United States Securities and Exchange Commission is reportedly investigating the startup behind the world’s largest decentralized cryptocurrency exchange, Uniswap.
The U.S. securities regulator has initiated a probe into Uniswap’s main developer, Uniswap Labs, the Wall Street Journal reported on Friday.
The report says that enforcement attorneys are now looking for information about Uniswap’s marketing and investor services, citing anonymous sources familiar with the matter.
A spokesperson for Uniswap Labs reportedly said the firm is “committed to complying with the laws and regulations governing our industry and to providing information to regulators that will assist them with any inquiry.”
Uniswap is a decentralized exchange that enables users to swap between Ethereum-based coins and tokens without a central entity. The exchange is ranked as the largest decentralized exchange, with a $1.5-billion trading volume over the past 24 hours at the time of writing, according to data from CoinMarketCap.
A spokesperson for the SEC declined to comment on the existence or nonexistence of a possible investigation to Cointelegraph. Uniswap did not immediately respond to Cointelegraph’s request for comment.
The news comes amid the U.S. regulators paying increased attention to the decentralized finance (DeFi) industry, with SEC chairman Gary Gensler last month announcing the authority’s plans for more crypto-related rules targeting DeFi, token offerings, and stablecoins. In late August, the regulator signed a $125,000 deal with blockchain analytics firm AnChain.AI to get tech assistance in monitoring and regulating the DeFi industry.
Prior to the SEC’s increased efforts to look into the DeFi, Uniswap delisted dozens of tokens and tokenized stocks from its trading platform in late July, citing growing regulatory pressure. “We monitor the evolving regulatory landscape,” Uniswap said, pointing out similar moves taken by other DeFi players.
By its definition, the DeFi industry is a blockchain-based form of finance that does not rely on any central financial intermediaries, operating transactions through automatic protocol mechanisms known as smart contracts instead. The industry has seen massive growth in recent years, jumping from around $8 billion in total value last September to more than $174 billion at the time of writing.
In line with DeFi principles, decentralized exchanges (DEX) like Uniswap don’t have a central person or team responsible for running the protocol, operated and supervised either automatically or by the participants. According to the crypto investor and entrepreneur Alistair Milne, regulators won’t be able to shut down DeFi smart contracts like Uniswap but could potentially make DeFi transactions illegal in a similar way to transacting on the dark web.