The U.S. Securities and Exchange Commission (SEC) opened an investigation into Uniswap Labs, the company behind the decentralized exchange (DEX) for cryptocurrencies Uniswap.
Lawyers for the regulatory agency, are gathering information about how Uniswap works and how cryptoassets are traded on the platform. This was reported by some “people familiar with the matter” to The Wall Street Journal.
The investigation into DeFi comes days after CryptoNews reported that the SEC signed a contract with a blockchain analytics firm with an eye toward implementing greater oversight of decentralized finance platforms.
The company AnChain.AI would be in charge of helping the SEC monitor and regulate the various platforms with financial functionalities.
In light of the SEC’s investigation, Uniswap Labs indicated that they are “committed” to complying with the laws and regulations governing the industry. They also said they are willing to “provide information to regulators that will assist them with any inquiries.”
The investigation is not an indictment
In the view of Jake Chervinsky, general counsel of Compound, a decentralized finance platform, the investigation should not come as a surprise to anyone.
He also clarified that an investigation is not an “indictment of wrongdoing”, it is just the SEC’s way of “gathering information”.
On the other hand, Delphi Labs general counsel Gabriel Shapiro indicated that DeFi Projects is starting to receive letters from the SEC and inquiries from other regulators.
“Requests for information mean subsequent conversations about how the space works before addressing the question of whether a crime may have occurred and, further, in the event of a settlement,” Shapiro said.
The attorney also believes the SEC’s actions are to “catch up with a space that is growing at a rapid pace” and that’s why they are turning to Uniswap, a major player in DeFi.
Uniswap users speak out
Following the SEC’s decision, users of the Uniswap platform spoke out on the social network Twitter, since one of the advantages of Uniswap or any DEX so far is precisely to be able to act outside the control of regulators.
Among the people who spoke out about it, were
is Juan Fornell, a member of the Spanish exchange Bit2Me. In that sense, he said
that “the investigation that the SEC has opened to Uniswap Labs is an attack on DeFi and the crypto industry in general. My bet is that they are not going to stop the revolution”.
For his part, @jvalladolidga
who describes himself as a “shitcoin trader”, believes that the problem with Uniswap “will end up blocking any American” from the exchange.
“It also doesn’t matter if http://uniswap.org is blocked because the protocol can be accessed from any other interface. And if the SEC decides to hunt down the founders, other anonymous protocols will surface,” he said.
It is important to remember, that Uniswap
is a decentralized exchange market that allows exchange operations between any ERC20 token and ether (ETH), without intermediary entities and with a commission of just 0.3%. Uniswap leads the ranking of decentralized exchanges. Source: CoinGecko.
Any token can be exchanged within this platform, thanks to the fact that any user can open a new exchange market, adding his own ERC20 token to the catalog through an exchange contract that the platform allows to generate.
Uniswap can hide tokens
Recently, Uniswap proved that it is a decentralized platform, when it restricted several tokens
through its website, however, this decision does not include the Uniswap protocol.
That is, the ban on tokens is only at the level of its website, while the code remains open source and users can add the tokens they want.
The decision was apparently motivated by the actions taken by the Financial Action Task Force (FATF) on the cryptocurrency market. Also because of what the SEC has commented on the issue, which generated even more pressure on the cryptocurrency market.
DeFi worries SEC Chairman
The issue related to DeFi’s like Uniswap and more, has generated concern for SEC Chairman Gary Gensler
In early August, Gensler said
that the concern stems from the new ways in which people are accessing cryptocurrencies through DeFi.
In that sense, he called on the U.S. Congress to pass legislation granting legal authority to closely monitor cryptocurrency exchanges, although he assumes that the institution has ample power to monitor cryptocurrency exchanges.
It is important to remember that many DeFi platforms are not companies, they are simply a smart contract uploaded to the network, sometimes by anonymous developers not registered in any jurisdiction. That would make any regulatory attempts difficult.