It’s been a tumultuous few weeks for the head chef of Sushi Swap, Jared Grey. Grey is facing mounting pressure from US regulators in the form of a subpoena and has had to confront an uproar within his own community in order to address financial issues and fund a legal defense fund for the Sushi DAO.
Western regulators, led by the US Securities and Exchange Commission (SEC) have sharpened their regulatory focus on digital assets as evidenced by the barrage of enforcement actions taken against various crypto firms this past year. The SEC’s latest target, Sushi Swap, received a subpoena last week. Although Grey has declined to divulge the details of the investigation, it appears that the protocol may be headed towards a legal battle with the SEC.
Sushi Swap is one of the most popular Decentralized Exchanges (DEXs) operating on the Ethereum blockchain. The DEX operates autonomously via a flat governance structure that is managed by Grey and steered by governance token holders.
Last week, Grey proposed a $4 million Sushi DAO Legal Defense Fund to finance the expected legal battle. His idea was met with swift backlash from the Sushi DAO community, who raised questions over the wisdom of investing so much of the protocol’s funds.
The disapproval from the community has been compounded by the financial issues Sushi Swap has been struggling with for some time. Grey admitted that the proposed legal defense fund was part of an effort to “stem the bleeding” of funds that had been occurring.
Just days after the subpoena was revealed, the Sushi DAO’s native token SUSHI saw a 12% drop in price. The series of events has led the community to rightly ask the question of whether establishing this legal defense fund is really in the best interest of the project and its community members.
Grey has also been criticized for not providing any details about the subpoena and advising to “leave it at that for now”. However, some community members have urged Grey to share more details, considering the hefty financial investment they’d be committing themselves to.
One community member, ChronoFury, wrote on the forum, “Post the subpoena, the community deserves to know. Otherwise, how are we supposed to fund something we know nothing about?”
Though a significant portion of the Sushi DAO has already voted in support of the legal fund and Grey maintains that Sushi Swap continues to cooperate with the SEC, it is still unclear how all of this will play out for the DeFi project. The exact details of the subpoena and the resulting legal battle could decide the future of Sushi Swap – and whether the DAO is willing to “bleed funds” for Jared Grey and his ambitions.