Sushi Swap Head Chef Jared Grey has expressed his disillusionment with the state of the crypto industry as regulatory crackdowns, including actions against the decentralized exchange (DEX) he manages, have intensified.
Grey spoke about his feelings towards U.S. regulators and the industry during a recent ask-me-anything call on Discord.
Grey shares: "It really feels like over this last cycle that the majority of that feeling [of excitement] is gone now. Look at what's going on on the regulatory side of things. Like this morning, Senator [Elizabeth] Warren [was] stating she's putting together an anti-crypto army to regulate the space into obedience."
Grey's comments come after he disclosed that the U.S. Securities and Exchange Commission (SEC) served him and Sushi DAO with a subpoena, signaling the potential for a prolonged and costly legal battle with regulators seeking stricter oversight over crypto firms.
Unlike centralized exchanges such as Coinbase or Binance, Sushi Swap operates via smart contracts on the Ethereum blockchain as a DEX, managed day-to-day by Grey and governed by token holders who vote on proposals. Anticipating the legal battle, Grey recently proposed allocating $4 million of the protocol's treasury funds to a "Sushi DAO Legal Defense Fund." The fund, nearly equal to the DAO's annual operating expenses, has faced significant backlash on community Discord channels and became a focal point during the call.
Although attendees of the community call requested further information about the subpoena, Grey declined to provide more details, citing legal advice. Despite the controversy surrounding the legal defense fund, Grey's responses appeared to satisfy the call participants, who remained silent on the matter.
"I've been advised by legal not to talk about subpoena in detail," Grey said. "Just to say, 'Hey, you know, we've received one [and] we're cooperating with it,' and kind of leave it at that for now."
However, the legal defense fund proposal has sparked debate on the DAO's governance proposal forum, with some community members demanding transparency about the subpoena and others calling for Grey's resignation. Roughly a third of poll respondents in the forum have voted against the fund so far.
This controversy emerges as Sushi Swap grapples with ongoing financial challenges. In December 2022, the protocol reduced its annual runway requirement from $9 million to $5 million, and Grey revealed that Sushi Swap had less than 18 months of runway left in its treasury. Grey acknowledged these financial issues during the call, stating, "All that we're doing now is just like to stem the bleeding that kind of has been occurring."
The recent SEC investigations have taken its toll on the protocol's native token, which has dropped 12% since the announcement of the subpoena. As regulatory scrutiny continues to intensify, the crypto community will undoubtedly keep a close watch on the unfolding situation and its potential impact on the industry at large.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.