Uniswap, the biggest decentralized cryptocurrency exchange (DEX), is under investigation by the US Securities and Exchange Commission (SEC). Reports were first released on Friday, stating that SEC attorneys are seeking information about how the platform is being marketed to the public, and how investors use Uniswap. Moreover, the SEC enforcement is reviewing the company’s crypto lending applications.

It is entirely obvious that an investigation is going to take place, based on anonymous informants. A Uniswap Labs spokesperson says that they are committed to complying with the laws and regulations. Furthermore, the team will further assist the regulators with all the information necessary for the inquiry.

Uniswap is an Ethereum-based protocol for swapping ERC20 Tokens, and it has grown drastically since its V1 release in November 2018. It is a tool that enables crypto enthusiasts to trade tokens without any middleman or exchange fees. In August, the platform facilitated over $53 billion in trading volume, with users locking in $5.2 billion worth of assets to provide liquidity. Its token, the UNI, dropped over 6% after this SEC-related news, so it has taken quite a hit in the past couple of days. However, the UNI market appears to be bringing itself back on track successfully.

DeFi Community Comes to Uniswap’s Rescue

The Crypto Twitter world was shocked by the SEC-related news, as a few influential crypto developers and content creators tweeted their support for Uniswap Labs. One person who reacted was Yearn.Finance creator, Andre Cronje, who tweeted that he would protect the Uniswap team and do everything in his power to help them. Jake Chervinsky, a blockchain and crypto regulation lawyer, tweeted that there is not much to worry about regarding the SEC investigations, as they do not actually involve any allegations of wrongdoing.

In Conclusion

When DeFi first began to flourish, Gary Gensler became the head of the SEC. He suggested that DeFi could be high on his list of priorities. He mentioned particularly both centralized and decentralized exchanges, saying that the platform could suggest securities laws if they backed up tokens that could be deemed as securities. In addition to the SEC’s inquiry into Uniswap, their enforcement department has recently sent letters to numerous startups, as part of an effort to explore crypto lending services.