Sushi DAO Proposes $3M Legal Defense Fund After Getting SEC Subpoena
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Sushi DAO Proposes $3M Legal Defense Fund After Getting SEC Subpoena

Sushi recently announced it has been subpoenaed by the SEC and proposed the establishment of a $3 million legal defense fund.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

According to a proposal created on its DAO on Tuesday, March 21st, Sushi, as well as its “Head Chef” Jared Grey recently received a subpoena from the Securities and Exchange Commission. The proposal is aimed at creating a legal defense fund that is to contain $3 million in USDT.

Sushi Subpoenaed by the SEC, Wants to Create Legal Defense Fund

On Tuesday, March 21st, Sushi’s “Head Chef” Jared Grey created a proposal on the DAO to create a legal defense fund. The fund is planned to contain $3 million worth of USDT with a contingency to make another $1 million of the stablecoin if the fund depletes. The funds are to be used to “provide coverage for reasonable attorneys’ fees”.

The assets are to be stored in a multisig and made available as needed. According to the proposal, the vote is motivated by a recent SEC subpoena issued to Sushi as well as Jared Grey himself. Sushi, however, also stated it has no intention of making public comments on the investigation or other matters.

The initial reactions to the proposal mostly questioned how did Sushi, being a DAO and not a centralized entity, even get subpoenaed. Some called the SEC’s move another attempt to “go for easy victories” and added that “the easiest is to grab anyone on the US soil”. Another member commented that considering the current regulatory climate, they may as well also establish a lobbying fund together with the legal defense one.

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SEC Offensive Against Digital Assets Intensifies in 2023

While the Securities and Exchange Commission has been noted for its aggressive approach multiple times, many feel the regulator redoubled its efforts in 2023. February in particular saw an uptick in the Commission’s activity and Brian Armstrong, the CEO of Coinbase, even hinted that the watchdog is preparing a broader assault on crypto staking in general.

Within the span of just a few days in February, the SEC revealed a $30 million settlement with Kraken ordering it to discontinue its staking service and sent a Wells notice to Paxos alleging that the stablecoin BUSD is an unregistered security. Around the same time, the New York financial watchdog also ordered Paxos to stop minting its Binance-branded stablecoin prompting the exchange to stop using it with the most recent development being the filling of the so-called SAFU fund with USDT and TUSDT.

Despite the pushback, some even coming from within the SEC, the rhetoric of the agency has remained largely the same. In a recent interview, Gary Gensler again claimed that most of the cryptocurrency industry is not compliant and warned that, unless that changes, more regulatory actions are to come. While the question of the lack of a clear legal framework for digital assets has been open for some time, rapid improvement, at least at the federal level, is unlikely to come quickly as the first-ever meeting of the Subcommittee on Digital Assets demonstrated sharp divisions in its ranks.

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