Lido’s LDO token fell 10% on Saturday following rumors that the U.S. Securities and Exchange Commission (SEC) had issued a Wells notice to the largest ethereum staking service.
Source: Tradingview
A spokesman for Lido declined to comment on whether the agreement had been notified.
The SEC typically sends Wells a notice detailing the allegations it is investigating against the recipient. On Friday, David Hoffman of The Bankless Crypto Podcast revealed that he had heard that Lido and other crypto projects had been notified by Wells, but had since withdrawn their claims.
However, the rumor caused panic on Crypto Twitter and quickly spread throughout the Colorado conference hall held at ETHDenver, one of the largest crypto industry gatherings of the year. But if proven true, the rumor would suggest that the SEC is stepping up oversight of ethereum and cryptocurrency staking.
wells rumors.announcement
On Friday, Hoffman was at a video stream A number of Wells notices have been issued over the past week, including Lido.After the video went viral on Twitter, Hoffman immediately correct.
“While at least one confirmed Welles statement has disappeared recently, the public is not aware that the explosion idea is incorrect. Apparently there were rumors that Lido was caught killing Gary the Terminator, but members of Lido’s team Contacted me and said it was fake.
It’s unclear how the SEC will send Lido a notice. The staking service is technically run by a Lido Dao (Decentralized Autonomous Organization), which means it is coordinated by a large network of LDO holders and lacks a formal leadership structure.
Although Hoffman retracted his comments, the market appeared to react to his remarks. The price of LDO has fallen by 10% in the past 24 hours.
Andrew Thurman of crypto analytics firm Nansen tweeted that Wintermute, one of the largest crypto market makers, had sold about 10% of its LDOs, or $2 million. Thurman speculated that the decision to sell had something to do with Wells’ rumors.
During the Wells Notice debacle (should be Not Wells Notice amirite) Wintermute Trading cut about 10% $LDO location, send $2 tokens to Coinbase via an intermediary wallet
Still holds $21 million worth pic.twitter.com/hpiVV9qzWu
— Andrew T (@Blockanalia) March 4, 2023
The SEC’s Crypto Crackdown
Wells’ announcement comes amid a crackdown by U.S. securities regulators on the broader crypto industry. Last month, stablecoin issuer Paxos confirmed receipt of Wells’ announcement on Feb. 3. The SEC said it was investigating allegations that Paxos operated unregistered securities using the Binance-pegged BUSD stablecoin.
Lido is a liquid staking platform that helps users lock (stake) tokens to earn interest and help secure the Ethereum blockchain. Lido Purportedly Currently Accounts for 31% of ETH Collateralized Dune analysis. A whopping $8 billion has been invested in Ethereum through the Lido decentralized service, making it the largest investor.
Last month, cryptocurrency exchange Kraken agreed to shut down its staking service in a settlement with the SEC. The incident cooled the cryptocurrency staking space and raised regulatory concerns over the centralized control and operation of similar services, DAOs.
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Mingying
According to Coindesk
