The price of SushiSwap's SUSHI token slipped by roughly 5% following an announcement made by Jared Grey, the decentralized finance (DeFi) platform's head chef.
Grey revealed that he and SushiSwap had recently been served with a subpoena from the U.S. Securities and Exchange Commission (SEC).
The SEC typically serves a subpoena when it believes that a company or individual may have information relevant to an ongoing investigation or potential violations of securities laws. The subpoena compels the recipient to produce documents or provide testimony related to the matter under investigation.
In response to the subpoena, Grey proposed the establishment of a legal defense fund to cover legal costs for the platform's core contributors.He outlined the goal of creating a legal defense fund of $3 million in Tether (USDT) to cover various legal costs. Grey stated that SushiSwap is cooperating with the SEC and does not intend to comment publicly on ongoing investigations or other legal matters.
The defense fund is set to support the core contributors who have been actively involved in Sushi 2.0. The fund will cover attorney fees and other related expenses throughout the legal proceedings, regardless of whether or not a contributor is no longer associated with the organization. The payments from the fund will continue until the legal proceedings come to an end.
In Grey's proposal, the project's funding sources include Kanpai fees, grants, and SUSHI market sales, with the goal of easing the financial strain while ensuring adequate funds for legal costs. The funding strategy aims to safeguard the financial stability of SushiSwap DAO while also addressing the pressing legal issues.
In the event that the initial funds deplete, Grey's proposal includes a contingency plan for the DAO to make an additional $1 million in USDT available as needed until legal proceedings conclude.
Grey cited the recent establishment of a similar legal defense fund by MakerDAO as a precedent for his proposal. He argued that DAOs must execute similar proposals to help manage liability for core contributors in the face of an uncertain international regulatory environment for decentralized organizations.