In another sign of increasing regulatory pressure on the crypto industry, the U.S. Securities and Exchange Commission is investigating Uniswap Labs, the developer behind the decentralized exchange of the same name, the Wall Street Journal reported on Friday.
- Citing people familiar with the matter, the report said the SEC is seeking information on how investors use Uniswap — the world’s largest decentralized exchange — and how the platform is marketed. The investigation is in its early stages and may not produce any allegations of any wrongdoing.
- A spokesperson for Uniswap said 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’s native token UNI lost roughly 8% overnight on Friday, though has regained some of its position coming into the week, and was trading at US$30.19 at press time, according to data from CoinMarketCap.com.
- Despite decentralized exchanges’ lack of intermediaries, SEC chair Gary Gensler hinted recently they might not be immune from regulation, saying last month he believes some such projects have features similar to those the SEC oversees. Gensler said projects that incentivize users with digital assets could be considered to be engaging in activity that should be regulated. “There’s still a core group of folks that are not only writing the software, like the open-source software, but they often have governance and fees,” he said.
- Last week the SEC brought charges against the founder of the now-defunct crypto exchange BitConnect for what it termed a US$2 billion “textbook Ponzi scheme,” in which it is alleged Satish Kumbhani deliberately misled investors about the company’s ability to earn 40% returns. Promoter Glenn Arcaro was also charged by the SEC for receiving more than US$24 million in referral commissions through BitConnect. Five individuals had already been charged with fraud in relation to BitConnect in May.
- The SEC also scored a win in its closely watched lawsuit against Ripple Labs last week as a court granted access to Ripple’s employee messages on popular workplace chat app Slack. “The Slack messages sought are relevant to the parties’ claims and defenses and proportional to the needs of the case,” wrote U.S. Magistrate Judge Sarah Netburn in her court order.
- In December 2020, the SEC sued Ripple Labs alleging the company’s sale of its XRP token was an unregistered securities offering worth over US$1.38 billion. The core question of the case is whether transactions involving XRP are to be considered “investment contracts” and therefore, as securities, would be subject to the Securities Act of 1933.