The U.S. Securities and Exchange Commission (SEC) has launched a probe into Uniswap Labs, the company behind decentralized exchange Uniswap.

Uniswap is a decentralized exchange protocol underpinning the eponymous Ethereum-based exchange that allows anyone to swap ERC-20 tokens without middlemen. 

It’s also one of the major players in the decentralized finance (DeFi) ecosystem which seeks to replace centralized middlemen in traditional financial products, such as loans, insurance, and derivatives, with decentralized, non-custodial applications.

According to a WSJ report that cites sources familiar with the matter, the SEC is seeking to obtain information about how investors use the trading platform and how it is marketed.

The SEC declined to comment, saying that the agency doesn’t confirm or deny investigation reports.

A spokesperson for Uniswap meanwhile told WSJ 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's time in the spotlight

Uniswap’s third version was launched in May 2021 and is currently the largest decentralized exchange in the industry. In the last 24 hours only it commanded more than $1.5 billion in trading volume, according to data from CoinGecko

While the investigation is reportedly “in its early stages and may not produce any formal allegations of wrongdoing,” it comes hot on the heels of the comments from the SEC’s chair Gary Gensler about the burgeoning sector of DeFi.

Speaking to WSJ last month, Gensler argued that DeFi projects such as Uniswap could ultimately fall under the purview of regulators. 

He also suggested that there’s a group of people involved in DeFi who write the open-source software, but that software also comes equipped with “governance and fees,” as well as “some incentive structure for those promoters and sponsors in the middle of this.”

Prior to that Gesler also suggested that DeFi projects could violate not only the U.S. securities laws but commodities and banking laws as well.