Can private-sector space business be profitable, or is it just an exciting way for billionaires to live out their fantasies?

What happens if you launch satellites into space without government permission, but with government funding?

We may find out soon, according to the Federal Communications Commission, which regulates satellite operations by US citizens and companies. It has completed an inquiry into the January launch of four small satellites built by a start-up called Swarm Technologies, and has referred the case to its enforcement bureau, according to a spokesperson.

The FCC, which does not comment on potential enforcement actions, can propose financial penalties and ban companies and individuals from operating satellites. Swarm’s CEO, Sara Spangelo, did not respond to a request for comment.

Spangelo and her co-founder Benjamin Longmier are awaiting the judgment of one branch of the government, even as their satellites continue to orbit overhead. Their technology was considered important enough by other public officials that Swarm, based in Menlo Park, California, received at least a million dollars in grants and other assistance—including a grant for more than $700,000 approved two months after their controversial launch.

What US agencies are saying now

Swarm had a contract with NASA’s Ames Research Center in Silicon Valley, a tie the company described in a January 2018 regulatory filing as “a paid grant and hardware delivery services program. NASA wants to test new satellite interlinking technology that they are developing in collaboration with Swarm.”

Now, an Ames spokesperson Kimberly Williams Minafra tells Quartz that “we no longer have an agreement.” NASA says the contract, issued by an unidentified contractor working for NASA’s Small Spacecraft Technology Program, paid for the delivery of “first-generation ground test hardware and software” and “performance data results from the company’s planned orbital test flight,” which suggests NASA helped pay for the unauthorized launch. It has “terminated” the flight data contract.

“Based on continuing Swarm Technologies statements, NASA…believed that FCC approval of the Swarm Technologies operating license was imminent and forthcoming,” the space agency said in a statement provided to Quartz today (May 1). “It was only after the January 12 launch that it became apparent that no license had been granted. NASA is not involved in the FCC’s license approval process for commercial missions, and NASA [was] monitoring regular progress as reported by Swarm Technologies.”

Other agencies also have backed Swarm. The National Science Foundation has made two grants to Swarm. According to the grant language, they are intended to support “the world’s smallest 2-way communications satellites and associated ground hardware,” with a focus on applications related to so-called “Internet of Things” devices. Dr. Richard Schwerdtfeger, program manager at NSF, declined to answer further questions about what made Swarm’s approach unique in a world teeming with small satellite startups.

The US Navy’s Space and Naval Warfare Systems Command (SpaWar) has a cooperative research and development agreement with Swarm “to test radar retroreflectors in space to enhance tracking of small satellites, and better tracking of orbital debris,” according to Swarm. This was a key problem for the company, whose FCC application was denied over concerns that their small satellites could not be tracked by US space radar. A Navy spokesperson, Steven Davis, confirmed to Quartz that the agreement existed and that he had found someone who could answer questions about it, but then stopped responding to e-mails and phone calls.

Where does Swam fit in now?

Swarm is a tiny start-up, only a little more than a year old. It’s not clear where its funding comes from, though both of its founders are serial entrepreneurs plugged into the Silicon Valley network. But, given the “unique launch economics afforded by the miniaturized satellites,” per the NSF award, government financing played a role in launching the unauthorized satellites. The NSF alone gave Swarm a $200,000 grant last year, alongside the NASA and US Navy contracts.

“Key contributions of this project include system and networking optimization and validation of the technology through end to end demonstrations,” notes the most recent NSF grant, awarded in March 2018.

The lack of communication between the officials who regulate these new satellites and those who pay for them shows the gaps in the US approach to regulating space as private companies gain new capabilities there. Lawmakers and the Trump administration say they are working to fix the problems.