According to comments he made during the protocol’s ask-me-anything call on Thursday, Sushi Swap Head Chef Jared Grey is no longer feeling “inspired” after a wave of regulatory crackdowns on crypto exchanges, including the decentralized exchange (DEX) he manages, has put immense pressure on the crypto industry.
During the first few minutes of the hour-long public meeting, Grey spoke candidly about his feelings toward US regulators and the general state of his industry to three other speakers before community members trickled into the Discord call, which CoinDesk attended.
“It really feels like the majority of that feeling [of excitement] has gone away over this last cycle,” Grey said. “Look at what’s going on in terms of regulation; for example, Senator [Elizabeth] Warren [was] stating this morning that she’s putting together an anti-crypto army to regulate the space into obedience.”
The remarks come just a week after Grey claimed that the U.S. The Securities and Exchange Commission (SEC) issued a subpoena to Grey and Sushi DAO as part of its broad efforts to rein in the burgeoning cryptocurrency industry. Although Grey declined to share the specifics of the subpoena, it could indicate that the protocol is in for a lengthy and costly legal battle with regulators who have vowed to tighten their oversight of crypto firms.
Sushi Swap isn’t like most cryptocurrency exchanges; the platform for trading Ethereum blockchain tokens uses smart contracts – what’s known as a DEX – rather than the centralized servers seen at Coinbase or Binance. Grey governs it on a daily basis, and governance token holders vote on proposals to shape it.
Grey proposed last week that the community reserve $4 million of the protocol’s treasury funds for a “Sushi DAO Legal Defense Fund,” which is nearly as much as the DAO’s annual operating expenses. The proposal received swift backlash on the community’s Discord channels, becoming a sticking point on Thursday’s call.
A community member asked Grey to clarify the subpoena during the second half of the community call, as attendees began to pour in. Grey refused to provide any additional information. “Legal has advised me not to discuss the subpoena in detail,” Grey said. “Just to say, ‘Hey, you know, we got one [and] we’re working with it,’ and leave it at that for now.”
Grey’s responses appeared to appease the call’s dozen or so attendees, one of whom apologized for bringing up the subpoena. Their silence during the meeting, however, stood in stark contrast to the community’s earlier, more abrasive efforts to reject the legal fund idea on the DAO’s governance proposal forum.
After the proposal was posted last week, members of the community left more than a dozen comments questioning whether the legal defense initiative was a wise use of the protocol’s funds, with some even calling for Grey’s resignation.
“Post the subpoena, the community deserves to know,” ChronoFury, a DAO member using a pseudonym, wrote on the forum. “How else are we supposed to fund something we don’t understand?” So far, roughly one-third of forum respondents have voted against the fund.
As the protocol struggles with its long-standing financial issues, members of the community have developed negative attitudes toward the legal defense fund. The protocol was amended in December to reduce the project’s annual runway requirement from $9 million to $5 million. Around the same time, Grey revealed that Sushi Swap had less than 18 months of runway remaining in its treasury.
During the first few minutes of the call, Grey acknowledged his efforts to address the protocol’s financial issues. “All we’re doing now is trying to stop the bleeding that’s been going on,” Grey explained.
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