Sushi Swap CEO says he no longer feels “inspired” amid US regulators’ crypto crackdown

Sushi Swap CEO Jared Gray is no longer feeling “inspired” after a wave of regulatory breaches at crypto exchanges, including the decentralized exchange (DEX) he manages, has put enormous pressure on the crypto industry, according to comments he made during the Protocol’s Q- me-whatever call on thursday.

Gray spoke candidly about his feelings about US regulators and the overall state of his industry to three other speakers during the first minutes of the hour-long public meeting before community members trickled into the Discord conversation, which CoinDesk participated in.

“It really feels like during this last cycle that most of that feeling [of excitement] is gone now,” Gray said. “Look at what’s happening on the regulatory side of things. Like this morning, Senator [Elizabeth] Warren [was] says she’s assembling an anti-crypto army to rule the space into obedience.”

The comments come a week after Gray claimed that the US Securities and Exchange Commission (SEC) served Gray and Sushi DAO with a subpoena as part of its sweeping effort to reign in the sprawling cryptocurrency industry. Although Gray declined to share the details of the subpoena, it could signal that the protocol is headed for a long and expensive legal battle against regulators who have promised to exercise stricter oversight of crypto firms.

Sushi Swap is not like most crypto firms; the arena for trading tokens on the Ethereum blockchain operates via smart contracts – what is known as a DEX – not through the centralized servers seen at the likes of Coinbase or Binance. It is governed from day to day by Gray and shaped by governance token holders who vote on proposals.

To finance the expected battle, Gray proposed last week that the community reserve $4 million of the protocol’s own funds for a “Sushi DAO Legal Defense Fund.” The fund, which is nearly as much as the DAO’s annual operating expenses, quickly drew backlash on the community’s Discord channels, becoming a sticking point at Thursday’s call.

During the second half of the community call as participants began pouring in, a community member asked Gray to provide more clarity on the subpoena. Gray declined to disclose further details.

“I’ve been advised by legal not to talk about the subpoena in detail,” Gray said. “Just to say, ‘Hey, you know, we’ve received one [and] we’re working with it, and leave it at that for now.”

Grey’s response seemed to appease the conversation’s dozen or so participants, one of whom apologized for bringing up the subject of the subpoena. Their silence during the meeting, however, drew a stark contrast to the community’s earlier, more strenuous efforts to reject the legal fund idea at 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 Gray to resign.

“Post the subpoena, the community deserves to know,” wrote ChronoFury, a pseudonymous member of the DAO, on the forum. “How else are we going to finance something we know nothing about?”

About a third of the respondents in a poll in the forum have so far voted against the fund.

Negative attitudes toward the legal defense fund have percolated among community members as the protocol grapples with its longstanding financial problems. In December, the protocol reduced the project’s annual runway requirement from $9 million to $5 million. And around the same time, Gray revealed that Sushi Swap had just less than 18 months of runway left in its treasury.

Gray acknowledged his efforts to resolve the protocol’s financial problems within the first few minutes of the call.

“Everything we’re doing now is kind of stemming the bleeding that’s occurred,” Gray said.

News of the recent SEC investigation has hit the protocol’s native token hard. It traded at $1.21 before Gray disclosed the existence of a subpoena; it has fallen 12% since.