The U.S. Securities and Exchange Commission (SEC) is investigating Uniswap Labs, the developer of Uniswap, the world’s largest decentralized (DeFi) cryptocurrency exchange.
The move is part of a broader look into the realm of digital assets, according to the Wall Street Journal.
“Enforcement attorneys are seeking information about how investors use Uniswap and how it is marketed.
SEC chairman Gary Gensler has said DeFi projects aren’t immune from regulatory scrutiny.”
At issue is Uniswap’s own digital asset, UNI, which was distributed to users last year.
“About 21% of the tokens were set aside for the Uniswap Labs team and future employees, while an additional 18% were designated for the firm’s investors. That allocation allowed insiders to potentially reap a windfall.”
However, there are no current charges pending.
“The civil investigation of Uniswap Labs appears to be in its early stages and may not produce any formal allegations of wrongdoing.”
Ari Paul, the founder and chief investment officer of BlockTower Capital, comments on the report in a Twitter thread.
“Regulators [tend to] bring serious enforcement against the worst actors (outright criminals), and give ‘slaps on the wrist’ to a few high-profile good actors to put everyone on notice.
Of all the DeFi projects to go after, Uniswap is clearly one of the better actors – airdropping tokens to active users of their working product. No fraud or theft.
My guess is the SEC will want to set an example that even well-intentioned projects like Uniswap can’t totally ignore the law, but they won’t want to arbitrarily lob an unfair punishment at a team that is clearly trying to create real value and reward their users.”
As for the timing, Paul notes that the SEC took seven years to initiate a case against Ripple, and resolution is still pending. While regulators may be better versed about the crypto space in 2021, Paul says they’ll still move relatively slow.
A Uniswap spokesman told the Wall Street Journal that the company 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 has clocked a 24-hour trading volume of $1.5 billion, according to CoinMarketCap.
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