REGULATION

Insiders say regulators are investigating Uniswap, Compound legal: no need to worry

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Insiders say regulators are investigating Uniswap, Compound legal: no need to worry

The Wall Street Journal reported that according to sources familiar with the matter, the U.S. Securities and Exchange Commission (SEC) is investigating Uniswap Labs, the developer behind the world's largest decentralized exchange Uniswap. Jake Chervinsky, General Counsel at the well-known lending protocol Compound, responded to the news by saying: No need to worry.

Rumors of Uniswap Labs Under Investigation

Insiders indicate that law enforcement officials are collecting information to investigate how investors are using Uniswap and how it is being marketed.

A spokesperson for Uniswap Labs stated that the company is committed to complying with all industry regulations and is assisting regulators in the investigation. A spokesperson for the SEC declined to comment.

Previously, Uniswap had hidden all synthetic tokens involving securities on its frontend platform for compliance reasons. Recap: Uniswap removes token interfaces in response to regulations, sparking controversy.

Compound Legal Counsel: Investigation is Just a Process, Not a Cause for Concern

Jake Chervinsky, legal counsel for Compound, often comments on DeFi regulatory issues. He mentioned that if the report is true, it is not surprising, considering that the SEC chairman has recently expressed opinions on DeFi frequently. However, there is no need to worry too much because an "investigation" does not imply illegal charges; it is simply the SEC's customary method of information gathering.

Erik Voorhees, founder of the trading platform ShapeShift, responded that it is important to note that when regulators start collecting information, it involves millions of dollars in legal costs and can bring losses to the subjects under investigation. Even if the investigation does not find any illegal activities, the regulators will not reimburse these cost losses.

Jake Chervinsky agrees with this perspective, stating that regulators investigating in this manner is incorrect and should be done through healthy collaboration, not disguised as enforcement actions.

Uniswap Remains the Most Profitable Decentralized Exchange

According to data, Uniswap has generated profits of up to $103 million in the past 30 days. Chervinsky had previously suggested allocating budget to legal expenses at Uniswap, indicating that the DeFi community is already aware of potential compliance risks.