The Securities and Exchange Commission (SEC) has issued subpoenas to Sushi DAO and its “head chef,” Jared Grey, as part of the regulator’s efforts to scrutinize the decentralized finance (DeFi) and cryptocurrency industries. The news was announced on the blog post on the Sushi Forum.
Sushi DAO Takes Precautionary Actions in Response to SEC Investigation
The subpoena indicates that the SEC is investigating potential violations of securities laws by Sushi DAO, including the sale of tokens that could be considered securities without proper registration.
Following the SEC subpoena, the chief protocol chef, Jared Grey, requested a $3 million USDT legal defense fund from the decentralized autonomous organization.
The funds will be used to cover defense costs against legal and financial consequences resulting from the SEC investigation, according to Grey, who also commented:
We cooperate with the SEC. We do not intend to comment publicly on ongoing investigations or other legal matters.
The blog post also stated that some revenue streams will support Sushi DAO’s legal defense fund to limit the financial burden on the organization while providing sufficient funds to cover legal costs and protect financial solvency. The revenue stream will be a combination of the following:
- This will include 50% of the Kanpai fee generated by the decentralized exchange platform SushiSwap.
- 35% of grants generated by protocol business development activities.
- 15% of Sushi tokens are generated from token sales on the market using the time weighted average price (TWAP) method.
According to Grey, this approach is designed to limit the financial burden on the organization and ensure that it can continue to operate effectively when faced with the legal and financial consequences of an SEC investigation.
Gray also stated that if Sushi DAO’s legal defense fund runs out before the end of the legal process, the protocol has made available $1 million USDT to cover legal costs if necessary.
This provision ensures that the protocol can continue to support core contributors and protect financial solvency if the initial funding source for legal defense is exhausted.
The SEC subpoena affected the Sushi token, causing the price to fall by more than 5.6%, from a peak of $1,250 to the current price of $1,138.
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