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SushiDAO served with subpoena by SEC

forum.sushi.com

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Re: SushiDAO served with subpoena by SEC

#51

Post by tbenst »

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.

Re: SushiDAO served with subpoena by SEC

#52

Post by rabf »

throw101010 wrote: post #49
soared wrote: post #13

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 distrib…

Its funny how the only reasonable commenter in this discussion has to use a throwaway account!

Re: SushiDAO served with subpoena by SEC

#53

Post by Kretinsky »

dvt wrote: post #18

Honestly, 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. [1] https://coinmarketcap.com/currencies/sushiswap…

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.

Re: SushiDAO served with subpoena by SEC

#54

Post by dvt »

Kretinsky wrote: post #53
dvt wrote: post #18

Honestly, 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. [1] https://coinmarketcap.com/currencies/sushiswap…

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, qui…

> 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.)

Re: SushiDAO served with subpoena by SEC

#55

Post by klyrs »

Kretinsky wrote: post #53
dvt wrote: post #18

Honestly, 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. [1] https://coinmarketcap.com/currencies/sushiswap…

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, qui…

> 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.

Re: SushiDAO served with subpoena by SEC

#56

Post by soared »

throw101010 wrote: post #49
soared wrote: post #13

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 distrib…

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.

Re: SushiDAO served with subpoena by SEC

#57

Post by saurik »

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.)

Re: SushiDAO served with subpoena by SEC

#58

Post by sumeno »

Kretinsky wrote: post #53
dvt wrote: post #18

Honestly, 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. [1] https://coinmarketcap.com/currencies/sushiswap…

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, qui…

> 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.

Re: SushiDAO served with subpoena by SEC

#59

Post by sneak »

dvt wrote: post #54
Kretinsky wrote: post #53

Earlier quoted context omitted.

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, qui…

> 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…

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.

Re: SushiDAO served with subpoena by SEC

#60

Post by dvt »

sneak wrote: post #59
dvt wrote: post #54

Earlier quoted context omitted.

> 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…

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 appl…

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.
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