Sushi DAO Faces SEC Probe: Jared Grey Proposes Legal Defense Fund

‍Sushi Head Proposes a $3M Legal Defense Fund

Sushi DAO and its ‘Head Chef,’ Jared Grey, have been recently served with an SEC Subpoena, according to a disclosure on March 21. The Sushi Head affirmed that they are cooperating with the SEC.

In response to the subpoena, Grey made a proposal to make available a legal defense fund of 3 million USDT. As per Grey, the 3 million will be held in a new multisig, making legal representation possible when required.

The 'Head Chef' states that the fund will cover legal costs for inquiries, litigation, and other issues related to core contributors, reducing liability for contributors. 

“It has become evident funds must be available to handle legal needs for operational continuity and to protect core contributors,” Jared Grey said

The funds will come from a combination of Kanpai fees (lump sum): 50%, Grants (BD revenue): 35%, and Sushi (TWAP market sales): 15%. Moreover, it would include a contingency to provide an additional $1 million USDT if the initial funds are exhausted.

A DAO member named Test1 questioned if the SEC sent the subpoena directly to Grey in order to pursue an enforcement action against a DAO. It's typical for Decentralized Autonomous Organizations (DAOs) to operate without a centralized entity using smart contracts to streamline the governance process.

“How does “sushi” even get subpoenaed? The human, I get, but sushi is a DAO, without centralized entity, isn’t it? I understand if they go for Jared, but how are they trying to get the DAO? By pressuring us with going after Jared? I got no letter in my mail, and I am the Dao, just like all the other members,” Test1 stated.

SushiSwap's $SUSHI is trading at $1.09, lost 11.78% after the news of the subpoena went out.

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US Authorities Recent Actions Against the Crypto Market

This is not the first time the SEC has taken action against crypto organizations this year. Earlier this year, the SEC fined Kraken over its staking product and sued Terraform Labs, founder, and CEO Do Kwon for alleged securities fraud over its staking product. 

Further, the Commodity Futures Trading Commission (CFTC) filed a lawsuit against Ooki DAO last September, the organization behind the Ooki Protocol. This action raised legal questions for DeFi founders and DAO members. 

The commission also took action against stablecoin BUSD issuer Paxos recently by labeling the stablecoin as a security, a first in the crypto market. 

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What is SushiSwap:

SushiSwap is a decentralized exchange part of the Yearn ecosystem. The platform is community-driven with no central governing figure. It is popular for its exchange among other decentralized finance tools it employs. The protocol runs on the Ethereum blockchain. SushiSwap also has a native token known as SUSHI.

Where to find SushiSwap:

Website | Twitter | Medium | GitHub |