The organization’s disclosure came in the form of a proposal submitted to the Sushi DAO for the establishment of a legal defence fund to cover potential legal costs

Sushi, maker of the Ethereum-based decentralized exchange SushiSwap, revealed on Tuesday it had received a subpoena from the Securities and Exchange Commission (SEC), indicating it could soon be subject to regulatory enforcement action.

The organization’s disclosure came in the form of a proposal submitted to the Sushi DAO for the establishment of a legal defence fund to cover potential legal costs.

Sushi, and Head Chef Jared Grey, were recently served with a Securities and Exchange Commission Subpoena, the proposal mentioned. We are cooperating with the Securities and Exchange Commission.

SushiSwap’s SUSHI token dropped 5 per cent following the disclosure, dropping to $1.14 from $1.22 in just an hour, as per CoinGecko.

The subpoena represents just the latest in a series of Securities and Exchange Commission enforcement actions that include penalising crypto currency exchange Kraken over its staking product and suing Terraform Labs founder and Chief Executive Officer Do Kwon for alleged securities fraud. As of Monday afternoon, the Securities and Exchange Commission had yet to declare it delivered a subpoena to Grey or Sushi.

The DAO proposal seeks to make $3 million accessible for the legal fund in the form of Tether’s USDT stablecoin. It includes a contingency that would make another $1 million worth of USDT available in case the initial funds are used up.

At one time, the proposal had 850 page views. One DAO member named Test1 wondered if the Securities and Exchange Commission sent the subpoena directly to Grey in order to bring an enforcement action against a DAO; such groups usually operate without a centralized entity and prioritizes a flat governance structure using smart contracts.

The Securities and Exchange Commission will go for easy victories and the easiest is to grab anyone on the US soil, a member named Miohtama reacted. The easiest solution would be to ensure that Sushi DAO does not have anyone from the US involved from now on.