SushiDAO served with subpoena by SEC
forum.sushi.comHonestly, I'm also flabbergasted when the guy is basically running an unregulated exchange that offers what are almost certainly unregistered securities[1] (definitionally, the value of $SUSHI LP tokens goes up when people trade other projects' tokens, so the Howey Test is clearly violated) and freely chooses to live in the US. The SEC is shooting fish in a barrel.
> shooting fish in a barrel
There's a sushi joke in there somewhere
Its rare for sushi to be grilled like this. But the SEC is going to make a go of it.
What is the crime here? Crypto trading is done by willing individuals, no one is forcing you to participate in this market.
Moreover, “regulation” is not a synonym of “good and righteous”, especially in the US, where things are quite shady when you look from the outside. FTX was the dear of the regulators, and ended us as a massive scam. The recurrent crises in the banking sector show that regulation is, frankly, quite useless.
Furthermore, the US has a long history of using “regulation” as a way to do financial repression against its population and other countries. Crypto, among all the scams and dubious projects, is one of the last harbingers of financial freedom in a world that gets darker and darker every day on that aspect.
Don't believe me? Well, the day you'll be on the longer end of the stick, you'll understand.
> What is the crime here?
https://www.law.cornell.edu/wex/securities_act_of_1933
But you bring up great points, and that's exactly why we use a political system called a "representative democracy" where if you don't like the laws, you can vote for those that align with your worldview, you can run for office yourself, or you can lobby your politicians to change them.
(Breaking the law is unfortunately not on that list.)
Thinking that the federal state, in the USA, is a representative democracy is delusional. It's an oligarchy, where power is shared between different interests coalition, such as the war industry, the financial sector, the ruling families, and so on.
"Vote for those who align your worldviews" in a bipartisan political system is laughable, same as "lobbying". JPMorgan can indeed lobby to protect its interests, regular citizens can't, or have to waste an amount of energy so high, for results so meaningless while doing it that it's useless in the end. Hence, the real citizens are the ones who have access to the system, be them corporations or oligarchs.
But to go back to the original argument, what's the problem here? All of this is virtual and doesn't affect the real world. Unlike the US banking system that needs taxpayer's money to bail itself out every 15 years like clockwork, the crypto space lives on its own.
Truth is, this crackdown is quite beneficial to the ecosystem, as all devs are leaving the US, or will have to. In the end we'll have a much more balanced tech sector, unlike now where the USA imposes its cultural norms and practices on the rest of the world.
No. The laws don't expire; we are mostly ruled by laws that we were not in any way represented for.
Everyone who was of voting age who could have voted for senators who ratified the income tax amendment is dead now. There is no person now living under the sixteenth amendment that was involved in its passage.
None of us alive today were voting for congressional reps back in '33; correspondingly the securities act applying to us is not in any way related to representative democracy. It might as well be dictatorial edict for all of our involvement.
Are you trying to argue that, under your proposed system of laws, we would need to re-litigate (for example) murder or arson for every new generation? Seems a bit silly. Either way, precedent can be freely overturned, so the Securities Act isn't immutable. It's just that most people still think it's a good idea.
Most people aren't aware of securities regulation at all.
Note that I didn't propose any alternate system, I just pointed out that the majority of the laws we live under were not a result of our being represented in any way.
Yes, all laws should have expiration dates built in, and the more controversial the law is the shorter that expiration should be.
A law passed 51-49 should not persist after that legislative period has passed.
A law passed 100-0 may be reasonable to persist for 50 years.
Should an individual be allowed to choose the risks they want to take with their own money? Yes or no. “But we voted for it” doesn’t change the fact that I don’t consent to something on the basis that enough people disagree with me.
> What is the crime here?
Offering unregistered securities, in apparent violation of the Securities Exchange Act. It's astounding how people think they can skirt the law without even familiarizing themselves with the law.
Crypto didn't exist when securities laws were created.
Just like your house didn't exist when laws against breaking into it were created. I'm not sure what the aim of your comment is, but what it appears to demonstrate is ignorance of the law. Rather ironic given what you were directly responding to.
lawyers hate this one simple trick! they apparently can't craft laws that are not made immediately obselete by new things.
> The recurrent crises in the banking sector show that regulation is, frankly, quite useless.
Car accident related deaths show that seat belts are, frankly, quite useless.
There is a clear causation and correlation between belts and accidents. As for regulation and crises, the current one shows that it's quite unclear.
What's happening, however is that, since the Patriot act, financial freedoms and the right to privacy became a meme. The state and the banking sector has more and more to say about how you spend your money and earn it. Fact is that a totalitarian regime would have to vote very few laws to enforce itself.
Crypto is a backstop against this.
But uni is also into irregular exchange. So, why are they not subpoenaed?
But he’s not exactly _running_ the exchange, is he? I mean, it’d be interesting to see how the SEC asks him to shut it down, and of course that’s actually impossible for him (or anyone really) to do.
If Tornado Cash was shut down (where everyone was pseudo-anonymous), SushiSwap can definitely be shut down. And TC wasn't exactly "shut down," it was just crippled by being blacklisted by USDC (Circle), essentially banned from all legitimate exchanges via sanctions, etc. Without liquidity, these financial toys are just dead code.
What's interesting is a steady stream of volume continues to flow through Tornado Cash, proving that it was indeed decentralized enough to withstand global sanctions. Although all funds exiting it are suspicious. One thing to remember is that the sanctions on TC currently only apply to US citizens and companies, although effectively given the US' dominant financial position globally, is indeed a massive red flag.
https://decrypt.co/123751/euler-finance-hacker-sends-1-6m-et...
The relevant bit is that the guy that is supposedly "running" this alledged unregulated security exchange can't shut it down himself. How is he running it if he's got no actual power over it?
Tornado Cash was sanctioned by OFAC, which makes it illegal for U.S. persons to interact with the relevant contract addresses to the same extent as interacting with North Korea.
SushiSwap is not going to be sanctioned. It's not clear what the U.S. could do to shut it down in the same manner, although of course, they could bring enforcement actions like this one and scare off any U.S. person from working on it.
The leaders of SushiSwap have long been running a Kleptocracy. About a year ago, “FrogNation” attempted a takeover of SushiSwap, and as a member of the DAO I did due diligence on the on Dani Sestagelli and Sifu. I found blockchain transactions demonstrating that they had been personally withdrawing >$30M from the treasury of their project WonderlandTime, and posted this evidence to the SushiSwap forums.
I was immediately banned from the Sushi forums and discord. About 30 days later, it was revealed that Sifu was known fraudster Michael Patryn, and the project imploded.
Sadly, the Sushi leadership has continued to suppress any investigative work by DAO members into the actions of leadership. There is undoubtedly a culture of suppressing information, and receipts suggestive of fraud. The SEC is right to investigate.
Funny that the founder can just submit to vote what is effectively “I need $3M USD and if that runs out additional $1M sums in perpetuity” with zero oversight on how it’s spent, outside of claiming it will be spent on legal costs.
Not sure if it's funny, but in a DAO often anyone can make a proposal (usually following a certain process and holding a small amount of thr governance token). They are calling for the token holders to give their opinion or approval for a transaction.
It will be funny if the vote reveals the founder has a majority of the tokens and can vote himself these funds from the DAO's treasury. But if the token is well distributed in the DAO and the community surrounding it, and the proposal passes the vote, I don't really see how it is funny. It is just how governance works in a DAO.
Personally, with the lack of details in this proposal I will vote against it, but at this stage it is most likely the kind of input the proposer is expecting, before the actual vote.
Its funny how the only reasonable commenter in this discussion has to use a throwaway account!
My point is more so that if someone asked for a couple million (or potentially unlimited millions), you’d expect clear breakouts of how it would be spent, how they’d prove to be spending it on the states purpose, what law firm they’re using, what needs to occur for another million to be pulled out, what needs to occur for millions to stop being pulled out, how often they’ll report out on what they’re spending it on, how they’ll be held accountable, etc.
Agreed, the terms were not clear, and as I've guessed the proposer has updated it based on the community input.
Sometimes when you write these things it's hard to nail down everthing and you can miss a scope creep because you assume honesty on your end for example. I think that it shows a healthy governance process if people can give their interpretation and desires and the proposer updates their proposal accordingly.
The fact he is unwilling to share more data in public about the case is problematic though, I get the issues with talking about an open case. One possibility would be to get the community to vote to elect a comittee of contributors who have demonstrated their care for the DAO to review the documents under NDA, same for reviewing the fees and they would vote on the relevance of such a fund (and its extent) to protect the DAO or not instead.
That is about what would happen in a board meeting. And the final edit ($1m top-ups are limited to twice, then come back and ask for approval again) seems like a reasonable response.
Presumably there is some audit trail on expenses after the fact?
Yeah that’s what I mean - boards and real companies have audits/etc. although if sushi is a c-Corp maybe they do need to submit documentation when they do taxes and such.
If you can't trust people in crypto, though, who CAN you trust?
That's pure madness.
"I won't comment on legal matters" "But I'm asking for legal funds" I'm asking for funds too. On matters I can't discuss. Does that apply too?
/s
>> Coverage: The Sushi DAO Legal Defense Fund will provide coverage for reasonable attorneys’ fees and costs for the following parties: Core contributors and multisig participants active since the ratification of Sushi 2.0 (Sushi 2.0: A Restructure For The Road Ahead 91) to present.
Anyone more familiar with the project able to speculate why they’re not including core contributors prior to Sushi 2.0?
___
Surprised core contributors would have publicly identified themselves, since even without any legal liability, to me it puts a huge target on their back given the leverage they have over the project assuming they have ability to commit code that is then distributed to the DAO.
Per the comments in the thread, they didn't post the subpoena and people are wondering whether this is real.
Well-timed fleece for sure
I initially thought this was a joke website about trading in literal sushi. After a few minutes on the website I'm still thinking it's a joke
Just about everyone here seems to have a principaled position against DLT. Also I think it should be mentioned that this is one of the first cases a relativley old and renowned DAO could be actually tried in a legal case with many possible implications. Also such a so called "technology neutral approach" to regulation has some flaws in itself. For example most people would say you can't really compare the web to mid 20th century phone lines and still a lot of laws are called something akin to "Communications act". That said I have not paid a lot of interest to Sushi, I finder other swaps better and I guess that 3 million dollars (to one person ?) are a kinda weird proposal.
...what even is SushiDAO? A Google search for "What is SushiDAO?" just gave a lot of articles with crypto-word-soup.
maker of sushi-swap dex incorporated as a company perhaps a c-corp unnecessarily
SushiDAO created a legal entity “to reduce liability” and then that entity and an individual associated with it got subpoenaed.
PSA: if there’s an entity, it’s not a Decentralized Autonomous Organization
sushiswap: https://www.sushi.com/
$SUSHI coin: https://coinmarketcap.com/currencies/sushiswap/
SBF on sushi-swap: https://www.forbes.com/sites/tatianakoffman/2020/09/06/exclu...
SBF the white-knight saved sushi swap https://decrypt.co/41606/the-man-who-saved-sushiswap
> PSA: if there’s an entity, it’s not a Decentralized Autonomous Organization
I don't completely agree, because a DAO like SushiDAO could lose it's websites and social media accounts, but the total value locked in it's smart contracts would not immediately change. (in the same way as a normal legal entity) These types of contracts are usually governed with their token, which would persist if the legal entity and current developers disappeared. Though, without a way for users to interact with the contract, I would imagine most of the total value locked would move away from the contracts afterwards.
SushiSwap is an exchange where you can swap TokenA for TokenB. A DAO is where an Organization operates based on RFCs and community voting. SushiDAO is the combination of the two, so an exchange that is ran by community voting. I suspect if it’s a DAO operating as a subsidiary of an LLC it’s a method to avoid liability.
>SushiDAO is a decentralized autonomous organization (DAO) that operates as a decentralized exchange (DEX) for cryptocurrencies[1]. It allows users to trade cryptocurrencies without the need for a central operator administrator, using their own preferred connected crypto wallet. SushiDAO has recently been in the news due to legal action taken against it by the U.S. Securities and Exchange Commission (SEC)[2][3]. In response, SushiDAO has proposed creating a legal defense fund to cover legal costs for core contributors and multisig participants[4][5].
Perplexity is a lot friendlier to crypto in search. https://www.perplexity.ai/search/61e58dba-0ef2-49fb-bc11-bf4...
It's a crypto exchange.
It's crypto fish soup.
I am praying everyday for the US financial system to collapse and the dollar to hyperinflate, so the good folks from Sushi company don’t have to deal with this unjust lawsuit.
$3M USD for legal fees - in what sort of banana republic is that necessary?
In a banana republic he’d have been beaten with a wrench until he hands over his crypto wallets.
> in what sort of banana republic is that necessary
For responding to a civil subpoena? None.
So, most of these "DAOs" aren't actually decentralied. You can build these things so they are decentralized in nature--where random users can vote on even something as critical as what code is running at any given moment--but there are inherent limitations then to what can actually be done by the organization. If you even just think through "who owns our (centralized) domain name?" the DAO often rapidly decloaks and you see a handful of people are running the show and have merely promised to do what everyone asked them to... and like, that's exactly what a normal centralized corporation is with shareholders, which we have chosen as a society (for better or worse) to classify as a security.
https://docs.sushi.com/docs/Governance/Current%20Governance%...
> Any use of the devfund wallet requires that the Multisig sign it, which they will only do if it is clearly by the will of the community and has had a passing vote by quorum. There must be at least 4 out of 7 signatures for a transaction to be approved.
> The Multisig members are trusted members of the DeFi & Ethereum ecosystem: @Mable_Jiang, @0xSami_, @nickjrishwain, @0xChop, 0xMaki, @tomlombardi, @DeFi_Ted
> Any changes that are within the purview of the core team, such as rebalancing and administration of farming pools and use of the growth fund, must pass the Operations Multisig with at least 3 signatures.
> The Ops Multisig members are: @MatthewLilley, @0xJiro, @LufyCZ, @sarangprikh22, @chillichelli, @OlaStenberg__
> Our goal is to establish a DAO with working, trustless governance. This is not an easy task by any measure, and is not something that will be rushed. All are welcome to discuss how the future DAO should work, as well as how the current governance model works, by participating on our forums and in the #governance channel of our Discord server.
This is, thereby, not decentralized and autonomous. This is a system where a small handful of people are sitting on a giant pile of cash--one which, AFAIK, is being funded by fees charged on the operating platform--that they promise they are managing on behalf of and at the direction of people who have received what amounts to a share in their organization as part of what is almost certainly an unregistered security offering. That they promise to use direct shareholder voting for as many decisions as possible and have an extremely liquid market for their shares doesn't change this analysis.
Which, to be clear, is entirely different from the situation with, say, Tornado Cash, or any other decentralized system. I'm seeing a number of people here saying "how would they even shut it down?! it's decentralized!"... but, no: the thing this DAO is isn't merely some decentralized contracts. (Hell: I haven't looked yet, but it wouldn't surprise me one iota if there were an obvious kill-switch in even the supposedly-decentralized part of the system that can be tickled by that Operations Multisig.)
lol get f*cked
Can you please not do this here? You may not owe sushi or DAOs better but you owe this community better if you're participating in it.