The decentralized finance (DeFi) space was rocked on September 5, 2020, when the pseudonymous founder of SushiSwap — known only as “Chef Nomi” — abruptly liquidated their developer token allocation, pocketing approximately $14 million worth of Ethereum and sending the SUSHI token into a freefall that wiped out nearly 90% of its value from the weekly high.
What had been one of DeFi’s most explosive success stories just days earlier turned into a cautionary tale overnight, raising urgent questions about trust, accountability, and the sustainability of anonymous-led protocols in the booming decentralized finance ecosystem.
TL;DR
- SushiSwap founder “Chef Nomi” liquidated developer tokens worth approximately $14 million in ETH on September 5, 2020
- The SUSHI token crashed from a weekly high of $11.72 to as low as $1.19 — a roughly 90% decline
- Chef Nomi withdrew 2.5 million SUSHI and 20,000 WETH, swapping SUSHI for roughly 18,000 WETH, ending up with over 38,000 ETH total
- The broader crypto market also suffered: Bitcoin dipped below $10,000, Ethereum fell over 10% to around $335
- Crypto lawyer Preston Byrne advised affected users to file FBI reports and pursue legal action
The SushiSwap Story: From Hype to Crash
SushiSwap launched in late August 2020 as a fork of Uniswap, the dominant decentralized exchange (DEX) and automated market maker (AMM) on the Ethereum network. The key innovation — or provocation, depending on your perspective — was a so-called “vampire attack.” SushiSwap offered lucrative incentives through its SUSHI governance token to lure liquidity providers away from Uniswap, and the strategy worked spectacularly. Within days, users had migrated approximately $1 billion in Uniswap liquidity tokens to SushiSwap, signaling what appeared to be a major shift in the DeFi landscape.
The SUSHI token itself had been on a tear. It peaked at around $11.72 earlier in the week, fueled by speculative mania and exchange listings. Binance, the world’s largest cryptocurrency exchange, listed SUSHI despite not knowing the identity of the project’s founder — a decision that would later draw sharp criticism from the community.
Chef Nomi’s $14 Million Exit
On Saturday, September 5, everything changed. In a single, now-infamous Ethereum transaction, Chef Nomi withdrew 2.5 million SUSHI and 20,000 Wrapped ETH (WETH) from Uniswap’s SUSHI/WETH liquidity pool, then swapped the SUSHI for approximately 18,000 WETH. In total, the anonymous founder walked away with over 38,000 ETH — valued at roughly $13 to $14 million at the time, paying a gas price of 1,000 Gwei for the privilege.
The impact on the SUSHI token was immediate and devastating. The price plummeted from around $4.44 to $1.21 within hours, a drop of more than 70%. By Sunday, it had traded as low as $1.19. From its weekly peak near $11.72, the token had lost approximately 90% of its value in a matter of days.
Community Backlash and Legal Threats
The crypto community’s response was swift and unforgiving. Chef Nomi became the target of widespread outrage and a doxxing campaign on Twitter. Crypto lawyer Preston Byrne of Anderson Kill Law publicly advised affected users to file reports with the FBI and seek legal representation, suggesting that the SUSHI token could be regulated as an unregistered security.
“This coin is regulated as a security, appears not to comply with Section 5 or an exemption from registration and therefore a sale is subject to a right of rescission,” Byrne wrote on Twitter. “With an alleged ‘exit scam’ you could also probably find common law claims. There are ways.”
Chef Nomi, for their part, refused to characterize the move as an exit scam. Drawing a parallel to Charlie Lee, the Litecoin founder who sold his entire LTC holdings at the peak of the 2017 bull market, Nomi claimed the sale was intended to remove financial distraction and focus on development.
“People asked if I exited scam. I did not. I am still here. I will continue to participate in the discussion. I will help with the technical part. I will help ensure we have a successful migration,” Chef Nomi wrote on Twitter, adding: “Charlie Lee did that and Litecoin had no problem surviving.”
The community was not persuaded. The timing and scale of the sale — and the fact that Nomi had previously promised not to sell the 10% developer allocation — severely damaged trust in the project.
Binance Under Fire
The controversy also engulfed Binance, which had listed the SUSHI token without verifying the identity of its creator. Binance CEO Changpeng Zhao (CZ) reportedly defended the listing in a since-deleted tweet, stating: “For SUSHI, I don’t know who the founder is. If we don’t list new DeFi coins, traffic goes to other exchanges, and we become… obsolete. We provide access to liquidity, we don’t force you to buy.”
“All coins are high risk, especially DeFi,” CZ added.
The statement drew criticism from multiple corners of the crypto industry. Adel Meyer, head of the DAPScoin project, captured the frustration of many: “The whole Sushi and CZ story is exactly what’s wrong with the crypto industry. Few days old project with unknown founder gets listed instantly on Binance for free where legit projects get charged or just never get a chance.”
Broader Market Context
The SushiSwap saga unfolded against a backdrop of broader market weakness. Bitcoin had started the week at $11,622 and was trading around $10,170 by September 5, having briefly dipped below the psychologically important $10,000 mark on Saturday. Ethereum suffered even more, losing more than 10% on the day to trade around $335, with its market capitalization falling to approximately $61.37 billion.
According to on-chain analytics firm Glassnode, the overall crypto market sentiment index dropped sharply from 52 to 27 points during the week, even as on-chain fundamentals — including network health and liquidity metrics — remained relatively strong. The Glassnode Compass stayed in bullish territory (Regime 1) for the 15th consecutive week, but noted that further price declines could push the market into a transitional zone.
Why This Matters
The SushiSwap rug pull became one of the defining moments of the 2020 DeFi summer, crystallizing the risks inherent in anonymous-led protocols and the speculative frenzy that characterized the decentralized finance boom. The incident exposed fundamental weaknesses in DeFi governance: when a project’s founder controls developer funds with no accountability mechanism, the entire ecosystem is vulnerable to a single point of failure.
The aftermath would prove equally dramatic. Sam Bankman-Fried (SBF) of FTX and Alameda Research would eventually take control of SushiSwap, steering it toward community governance. Chef Nomi would later return the $14 million in ETH — but the damage to confidence in anonymous DeFi projects was already done. The episode served as a stark reminder that in a space built on the promise of trustless systems, the human element — and human greed — remained the most unpredictable variable of all.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions.
the original vampire attack. sushi drained $1B from uniswap in days and then the founder just… walked off with 38K ETH. peak deFi summer.
and yet SushiSwap somehow survived and kept operating. DeFi is weird like that. The community took over and it became a real protocol.
chef nomi returning the keys a few days later after the backlash was wild. bro rug pulled and then un-rug pulled
Preston Byrne telling people to file FBI reports against an anonymous dev was peak 2020 energy. Like the FBI was gonna track down Chef Nomi.
SUSHI from $11.72 to $1.19 in a week. if you bought the top you were down 90% while the founder cashed out $14M. anon founders were always the biggest risk in deFi
BTC under $10K and ETH at $335 during this. everything was bleeding at once