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, according to comments he made during the protocol's ask-me-anything call on Thursday.
Grey spoke candidly about his feelings toward U.S. regulators and the general state of his industry to three other speakers during the first few minutes of the hour-long public meeting before community members trickled into the Discord call, which CoinDesk attended.
"It really feels like over this last cycle that the majority of that feeling [of excitement] is gone now," Grey said. "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."
The comments come a week after Grey claimed the U.S. Securities and Exchange Commission (SEC) served Grey and Sushi DAO (decentralized autonomous organization) with a subpoena as part of its sweeping efforts to reign in the sprawling cryptocurrency industry. Although Grey declined to share the details of the subpoena, it could signal the protocol is headed for a lengthy, and expensive, legal battle against regulators who have vowed to exercise more stringent oversight over crypto firms.
SushiSwap isn't like most crypto firms; the venue for trading tokens on the Ethereum blockchain operates via smart contracts – what's known as a DEX – not through the centralized servers seen at the likes of Coinbase or Binance. It is governed day-to-day by Grey and shaped by governance token holders who vote on proposals.
To fund the expected battle, Grey last week proposed the community reserve $4 million of the protocol's treasury funds for a "Sushi DAO Legal Defense Fund." The fund, which is almost as much as the DAO's annual operating expenses, received swift backlash on the community's Discord channels, becoming a sticking point on Thursday's call.
During the second half of the community call when attendees began to pour in, a community member asked Grey to provide more clarity on the subpoena. Grey declined to reveal any further details.
"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."
Grey's answers seemed to appease the call's dozen or so attendees, one of whom apologized for broaching the subject of the subpoena. However, their silence during the meeting drew a stark contrast to the community's earlier, more abrasive efforts to rebuff the legal fund idea on the DAO's governance proposal forum.
Community members left more than a dozen comments questioning whether the legal defense initiative was a wise investment of the protocol's funds after the proposal was posted last week, with some even calling for Grey's resignation.
"Post the subpoena, the community deserves to know," ChronoFury, a pseudonymous member of the DAO, wrote on the forum. "Otherwise, how are we supposed to fund something we know nothing about?"
Roughly a third of respondents to a poll in the forum have so far voted against the fund.
Negative attitudes toward the legal defense fund have percolated among the community's members as the protocol tussles with its longstanding financial issues. In December, the protocol reduced the project's annual runway requirement from $9 million to $5 million. And, around the same time, Grey revealed SushiSwap had just less than 18 months of runway left in its treasury.
Grey acknowledged his efforts to address the protocol's financial issues during the first few minutes of the call.
"All that we're doing now is just like to stem the bleeding that kind of has been occurring," said Grey.
News of the recent SEC investigation has hit the protocol's native token hard. It was trading at $1.21 before Grey revealed the existence of a subpoena; it has fallen 12% since.