Sushi DAO has proposed the creation of a legal defense fund in response to a recent subpoena of Sushi head Jared Grey and the DAO itself by the United States Securities and Exchange Commission (SEC).
Following this, SushiSwap’s (SUSHI) price has declined by 6.82% over the course of the week and by 0.39% over the past day. As of now, it is trading at $1.16, according to CoinMarketCap.
The proposal aims to establish a legal defense fund of $3 million USDT to cover legal costs for core contributors regarding inquiries, litigation, and other issues targeting them.
The regulatory environment for DAOs remains in flux, and the options for contributor insurance policies remain limited, hence the proposal for the legal defense fund.
The fund will cover reasonable attorneys’ fees and costs for core contributors who have been active since the ratification of Sushi 2.0 to the present. Disbursements will occur until legal proceedings conclude.
The proposal recommends that the funds come from a combination of Kanpai fees, grants, and Sushi’s TWAP market sells to limit the financial burden while providing needed funds for legal expenses.
Sushi Reportedly First DAO targeted By SEC
If the funds deplete, the DAO will make 1 million USDT available as needed until legal proceedings conclude.
Sushi is reportedly the first DAO that the SEC has targeted under the chairmanship of Gary Gensler. Still, the agency has been widely seen as cracking down on the crypto industry in recent months.
While the DAO’s proposal did not provide details about the SEC subpoena, it stated that it was cooperating with the SEC and would not comment publicly on ongoing investigations or other legal matters.
The Sushi DAO Legal Defense Fund’s proposal is crucial to address the immediate need for legal representation and protect the financial solvency of the DAO.
It is also necessary to manage liability for core contributors, especially as the regulatory environment for DAOs remains in flux.
The proposal follows in the footsteps of MakerDAO, which recently provided a similar legal defense fund for its contributors. DAOs must execute similar proposals to manage liability for their core contributors.
Nevertheless, Sushi DAO’s proposal for a legal defense fund is a necessary step in managing liability for its core contributors in the current regulatory environment.
It will ensure that the DAO can continue to operate and protect its contributors while providing the necessary legal representation.
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