Decentralized exchange Sushi and its head, Chef Jared Grey, revealed that the firm received a subpoena from the U.S. Securities and Exchange Commission (SEC). Although the reason for the subpoena was not disclosed, Grey noted that the company is cooperating with the regulator on ongoing investigations.
The SEC also requested that Sushi pay $3 million in legal defense funds to cover the cost of litigation, inquiries, and other issues surrounding the exchange’s core contributors.
Sushi Plans to Comply
In a blog post, Grey stated that Sushi would disburse the funds required by the SEC to carry out its investigations until the regulator completes the legal proceedings.
The project’s DAO will transfer the funds to a multisig wallet where the SEC will be able to access the funds for the examination. A multisig or multi-signature wallet is a digital wallet that requires that more than one private key signs and authorizes a transaction before processing.
According to the Sushi head, the firm will realize the funds from three different sectors to ease the financial burden on the firm while footing the investigation bills. The project would realize the $3 million from a 50% contribution from Kanpai fees, 35% from BD grant revenues, and 15% from TWAP market Sushi sales.
Sushi will Provide an Extra $1M if Funds Run Out
According to the post, Sushi would also provide an extra $1 million if the funds get exhausted during the course of the investigation. The governance arm of the DAO will make the full financial breakdown available in the second quarter of 2023.
Grey said in the post that Sushi proposed in March 2022 to organize a legal team to” reduce liabilities” for its core contributors and itself. However, he noted that the exchange would make the funds available for the investigation for continuity in its operation.
MakerDAO faced a similar subpoena and spent 5 million DAI on legal expenses throughout the investigation. DAI is a stablecoin on the Ethereum network, and its value is always as close to $1 as possible.
