- The investigation of Uniswap Labs by the SEC is the first such investigation of a DeFi platform by authorities
- SEC chair Gary Gensler has mentioned frequently his desire to target crypto exchanges since taking the post in May
- Some DeFi platform may consider themselves untouchable, but that could change
News that Uniswap maker Uniswap Labs was under investigation by the Securities and Exchange Commission (SEC) shocked many in the cryptocurrency world who assumed that DeFi meant ‘definitely not able to be shut down’. However, in accordance with the line taken by SEC chair Gary Gensler since his arrival into the post in January, how DeFi exchanges operate and how users interact with them is high on the list of priorities – and Uniswap Labs has been first to feel the force of this new direction.
SEC Seeking Uniswap Usage and Marketing Info
The Wall Street Journal broke the story on Friday, saying that the SEC is “seeking information about how investors use Uniswap and how it is marketed”. Despite the scary headlines, the case is a “civil investigation…in its early stages and may not produce any formal allegations of wrongdoing.” However, it represents a first step towards regulation of the murky DeFi sector for American authorities, and this first instance may prove something of a test case for their abilities to crack down on the sector as a whole.
Talk of regulating DeFi has grown in recent months, along with regulation of the entire crypto space. In late May Gensler told a hearing of the Financial Services and General Government subcommittee of the House of Representatives that cryptocurrency exchanges would be a high priority for regulators in the coming months and years, which was followed by CFTC commissioner Dan Berkovitz claiming that such platforms may not actually be legal.
DeFi Platforms to Feel the Force?
Gensler told the Wall Street Journal two weeks ago that “the legislative priority should center on crypto trading, lending, and DeFi platforms”, with his office clearly following his orders. DeFi platforms who previously considered themselves outside the law, even those not based in the U.S. but serving U.S. customers, may find themselves a little more worried today than they were last week, and will be even more worried if Uniswap Labs is hit with charges.
