The biggest DeFi exchange is being investigated by the SEC, report says

• Uniswap is under investigation by the SEC, according to the Wall Street Journal.
• The report said the SEC was looking into "how investors use Uniswap and how it is marketed."
• SEC chief Gary Gensler has hinted that more regulation is coming for DeFi.

Uniswap Labs, developer of the biggest decentralized finance exchange Uniswap, is under investigation by the Securities and Exchange Commission as DeFi breaks into the mainstream, according to a new Wall Street Journal report.

The Journal report, citing people familiar with the matter, said the SEC was looking into "how investors use Uniswap and how it is marketed." The SEC didn't comment to the Journal, while Uniswap said it was committed to complying with the law.

At this point, the SEC's investigation is under civil law, rather than criminal law, and it may or may not lead to charges. But the probe coincides with a separate SEC effort to gain insight into crypto lending platforms, asking in letters for information on whether digital assets should be SEC-registered securities, according to the Journal.

Uniswap pitches investors on its freedom of design, letting users make their own currency trades without central approval. But as crypto and DeFi have come into regulators' sights, Uniswap has been forced to pare back some of that freedom.

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

The Uniswap trading restrictions came shortly after SEC Chair Gary Gensler made remarks that clearly hinted that digital assets like tokenized stocks were likely to count as securities - and thus platforms offering them were likely running afoul of the law.

"Make no mistake: It doesn't matter whether it's a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities," Gensler told the American Bar Association.

"These platforms - whether in the decentralized or centralized finance space - are implicated by the securities laws and must work within our securities regime."