SushiSwap, an Ethereum-based decentralised exchange, has been issued with a subpoena by the US Securities and Exchange Commission (SEC). This could potentially lead to regulatory action against the decentralised autonomous organization (DAO). It was created by the Sushi DAO in Japan. The SEC’s move comes amid growing scrutiny of the crypto sector, with staking and detention under particular focus.

Sushi DAO Sets Up Legal Defence Fund in Response to Subpoena

Following the SEC’s subpoena of SushiSwap and its CEO, Jared Grey, the Sushi DAO has recommended the formation of a legal defence fund. The DAO’s proposal calls for $3 million to be made available to the fund, with an additional $1 million to be made available if needed. The funds would be made available in the form of Tether’s stablecoin, USDT. Legal expenses and charges against core participants who have been active in Sushi 2.0 would be covered by the fund.

However, no further details about the SEC’s subpoena have been released. The DAO stated that it is working with the SEC and would not be making any public comments on current investigations or even other legal matters.

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SushiSwap made headlines in 2022 after spending $30 million on incentives for financial intermediaries and losing money. The DAO subsequently recommended a revamp of SUSHI tokenomics at the end of last year. The revised proposal calls for an initial investment of $3 million, with an additional $1 million available to supplement it. 15% of the fund might be covered by sales of SUSHI. In March of 2022, Sushi established a legal defence fund with an initial allocation of 85,000 to 100,000 USD.

Kraken Ordered to End Staking Services by SEC

While the SEC has been cracking down on the crypto sector in recent months, Sushi is allegedly the first DAO to be targeted under the leadership of Gary Gensler. In February, Kraken was ordered by the SEC to end its staking services for customers in the United States. Moreover, the company was fined $30 million. The SEC has been paying close attention to the crypto sector, and more regulatory action is expected in the future.

SushiSwap’s legal troubles represent a growing trend of regulatory scrutiny of the crypto sector. As DAOs become more prevalent, they will likely come under increasing regulatory pressure, making legal defence funds and other measures increasingly important. In addition, the crypto sector will need to work closely with regulators to ensure that it can continue to grow and innovate while staying within the bounds of the law.