The US Securities and Exchange Commission has launched an investigation into the world's largest decentralized financial platform – Uniswap. According to a Wall Street Journal report, the SEC is investigating Uniswap's marketing and investor services. This investigation comes just a month since President Gary Gensler revealed that the watchdog has jurisdiction over DeFi platforms.
Uniswap is a decentralized exchange based on Ethereum that allows users to trade tokens created on Ethereum. Unlike exchanges like Binance and Coinbase, Uniswap does not have a central entity. It has exploded to become the undisputed leader in the DEX space and even rivals some centralized exchanges in terms of trading volume. It also boasts of having $ 2.9 billion in total locked value.
In the last 24 hours, it processed $ 1.62 billion, more than Bithumb, Kraken, Bitfinex, and Binance.US.
Despite being decentralized, Uniswap is now on the SEC's radar. According to sources who asked to remain anonymous, the regulator has been seeking information on "how investors use Uniswap and how it is marketed."
The SEC has refused to respond to requests from the media, including from the WSJ, claiming that it does not confirm or deny the investigative reports.
Meanwhile, a spokesperson for the exchange told WSJ that it is "committed to complying with the laws and regulations that govern our industry and providing information to regulators that will assist them with any queries."
SEC Can't Shut Down DeFi – Expert
The Uniswap investigation is the SEC's clearest that it intends to regulate the DeFi sector. Since its inception a few years ago, it has been assumed that the DeFi sector is out of the SEC's grasp, given that platforms like Uniswap are decentralized.
However, regulatory pressure has been weighing on DeFi. In July, Uniswap removed 100 tokens from its application interface, that is, the front-end web application portal. However, these tokens remained in the Uniswap Protocol, which is completely self-contained, permissionless, and immutable.
By removing the tokens from the list, the platform hinted that it was due to regulatory pressure, stating that "we monitor the evolving regulatory landscape."
Weeks later, SEC Chairman Gary Gensler gave an interview in which he told WSJ that DeFi platforms have some characteristics that make them look like the type of entities regulated by the SEC.
He stated: There is still a core group of people who are not only writing the software, like open source software, but often have governance and fees. There is an incentive structure for promoters and sponsors in the middle of this. Nevertheless, according Serial entrepreneur and cryptocurrency thought leader Alistair Milne, the SEC cannot shut down Uniswap or any other DeFi platform. However, you can make it illegal to use these platforms, just like the dark web.