Sushiswap: An Exit Scam or a DeFi Bubble Burst?

Sushiswap founder was accused of selling off SUSHI tokens worth roughly $13 million to ETH.

By · Sep 6, 2020 . 13min read

Sushiswap Defi news

After its meteoric rise all within a week of launch and being listed on some of the biggest exchange, evidence point to several facts that Chef Nomi, the anonymous developer behind the Sushiswap, a Uniswap fork may have planned to exit scam.

It all started when Chef Nomi, Sushiswap founder, was accused of selling off SUSHI tokens worth roughly $13 million to ETH. A Twitter user by the handle @spencernoon posted proof of the transaction, and the whole atmosphere became supercharged.

Chef Nomi alleged to has been caught trying to exit scam claims his actions were being misinterpreted. He said in a tweet:

The fact that I sold some $SUSHI devshare does not make Sushi more scam or less scam. The fact is on the code. I’m not sure why everyone thinks I am a scammer now. I did not steal anyone’s money. Devshare has been stated very clearly since the original blog post.

While many may disagree with Chef Nomi claiming he is not trying to exit scam, a lot of the DeFi community are concerned with how he went about the selloff. For instance, @realadamli tweeted thus:

I feel like most people’s issue with this is not that you sold, but how you sold. 13mil is a lot, so selling over time/in accordance to milestones with a heads up to the community would probably have been received better. Otherwise, how is this different from VCs dumping?

While the tirade is ongoing from the outraged DeFi and general crypto community on the possibility of a Sushiswap dev exit scam, Chef Nomi maintained his stance. He tweeted,

I will continue with the plan to elect the signers and continue the migration. I will setup the votes as promised. This MultiSig has been accumulating $SUSHI. https://etherscan.io/address/0xf73b31c07e3f8ea8f7c59ac58ed1f878708c8a76… And I am not @nomorebear.

DeFi experts weigh in on their thoughts on the seemingly exposed Sushiswap exit scam

Quite earlier while Sushiswap appeared to be having a field day, we reported on how DeFi experts like Will Warren, co-founder of 0x Project, had registered their displeasure concerning the Uniswap fork. Now that it appears the wish may be coming to pass, some others have waded in on what may be happening and the Sushiswap endgame.

Ameen, CEO of Spankchain made a full thread on how it is ill-conceived to think Sushiswap or its supporters may be able to build a strong community within a week. He opined that the now popular yield farming concept is a “zero-sum casino” where early farmers barely take on any risk. Ameen claims that those who go ahead to buy any of these flashy DeFi tokens are the players in a “greater fool” Ponzi game. He tweeted further that,

the founder @NomiChef , after posturing as an altruist who puts community first, claiming not to be a token-selling opportunist, cashed out $10M+ $sushi today this move has massively damaged trust in the project possibly irreversibly soQuote Tweet

Even SBF of FTX and Project Serum wasn’t spared.

Interestingly, Ameen even goes further to call out Sam Bankman-Fried, CEO of FTX derivative exchange and founder of the new DEX, Project Serum.

Of course, sam never cared about $sushi “community” how could he? it didn’t even exist a week ago he’s a psyop wiz and wanted to use the hype for his own purposes building out an ecosystem on @solana for @ProjectSerum

This is particularly interesting because many are accusing SBF of being Chef Nomi, the anonymous Sushiswap dev. While Sam claims he is not, he has also given his opinion on the matter.

SBF pushes for a way forward, and Chef Nomi has already bought into the idea.

In a tweet thread, he titled “A way forward for Sushi, and a way further back”, SBF lays out a possible route to take to salvage whatever remains of the Sushiswap if not an exit scam.

Firstly, Sam puts it out clearly he is not Chef Nomi and that the SUSHI chef is a piece of sh*t. After the bashing and acknowledging the damage Chef Nomi’s actions has caused the DeFi community, he says:

So what now? Well, first it’s imperative that Nomi release all keys and continue with the migration. As long as Nomi has control of Sushi, it does not have a future.

SBF then proposed that Nomi gives up all control, keys, etc. for Sushi, and it must be immediately; otherwise, the project is dead. Surprisingly, Nomi has followed suit with Sam’s advice.

Chef Nomi tweeted,

I’m transferring control to @SBF_Alameda now

And as evidence from the transaction hash presented, Chef Nomi has transferred Timelock admin control to SBF.

Major DeFi heavyweights like Andre Cronje of yEarn Finance have also rallied behind SBF as the new leader steering Sushiswap protocol and its aggrieved community. He tweeted

What @SBF_Alameda is doing/proposing is really the right way forward. Sushiswap as a uniswap fork, will always be just that. Sushiswap as a new AMM on Serum (built from ground up), can differentiate itself. On Serum it also has SBF backing, which cannot be understated.

SUSHI token tanked, Binance getting a series of backlashes for listing in a rush.

While the new of Sushiswap’s dev appeared to have exit scam, SUSHI token tanked to $1.16 from its ATH.

Sushiswap: Exit Scam? A developing story

Apparently, Binance exchange has been receiving severe backlash from the crypto community. Many accuse it of having listed a token with anonymous dev and no smart contract audit report. While many keep calling out CZ, the CEO of Binance, in one of his tweets, he said:

As one of the leaders of the space, we support innovation. With innovation comes the chance of high reward, and high risk. Some projects make it to the moon, while some fall short. Always manage your risk accordingly.

Whether Sushiswap survives this period remains is still unfolding, but the lessons are obvious. Many may not be able to recover their losses if SUSHI price remains at its present level having bought at the top.

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