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SEC is investigating Uniswap: Report

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The U.S. Securities and Exchange Commission has launched a probe to investigate Uniswap, the largest cryptocurrency exchange. Uniswap is the company behind decentralized exchange Uniswap. 

The U.S. Securities and Exchange Commission is investigating Uniswap, one of the largest cryptocurrency exchanges. Regulators are reportedly looking for measures regarding how investors use Uniswap and how it is sold.

SEC probe has come at a time when there is heightened regulatory interest in cryptocurrencies and the digital asset market. The Chairman of SEC, Gary Gensler has asked Congress to give more authority to better police crypto trading and lending.

Uniswap is a cryptocurrency marketplace for developers, traders and DeFi or decentralized providers of financial liquidity. DeFi is an open network operating in peer-to-peer systems where transactions are not routed through a centralized system like a bank or brokerage firm.

Uniswap backed by the regulatory body  

Uniswap helped the regulator support its civil investigation. Uniswap is the largest decentralized Ethereum blockchain exchange by trading volume. However, it is not clear what exactly the SEC wants to know. This news indicates the regulator's intention to pay more attention to decentralized finance (DeFi).

The spokesperson of Uniswap has said that the company is committed to complying with the laws and regulations governing our industry. 

Gensler’s suggestions 

Gensler has argued that there might be no central entity in charge of a decentralized exchange, DeFi projects that offer incentives or digital tokens to members may be subject to SEC regulation. The SEC filed its first case involving securities using DeFi technology last month, charging so-called DeFi lender blockchain credit partners with raising $30million through allegedly fraudulent offerings. 

Gensler has earlier suggested that DeFi projects could violate not only the U.S. securities laws but commodities and banking laws as well. 

According to the investigation, it appears that it is in the early stages and may not result in any formal allegations of wrongdoing. 

In May 2021, Uniswap third version was released and is currently the largest decentralized exchange in the industry. It commanded more than $1.5 billion in trading volume, as per the coinGecko data. 

In July Uniswap Labs restricted certain trades in assets like tokenized stocks on the Uniswap app it oversees, citing the evolving regulatory landscape. While the Uniswap app restricted these trades, the underlying protocol developed by the company on ethereum is open source and would not be affected. 

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