A popular altcoin has allegedly recently received notice from the US Securities and Exchange Commission (SEC). Lido’s LDO token fell 10 percent on Saturday after the US Securities and Exchange Commission (SEC) was rumored to be serving the largest Ethereum staking service with Wells Notice. Here are the details…
Altcoin hit by alleged SEC statement
A Wells Notice is a letter that details the charges the SEC is considering bringing against a buyer. On Friday, David Hoffman of the Bankless crypto podcast said he had heard that Lido and other crypto projects were being serviced by Wells Notices, a claim that was later retracted. However, the rumor caused panic on crypto Twitter and quickly spread to the Colorado convention hall, where ETHDenver, one of the biggest crypto industry meetings of the year, was underway. The rumors, if confirmed, indicate that the SEC is accelerating its Ethereum and crypto staking review.
Amid the Wells Notice debacle (should be a Not Wells Notice amirite) Wintermute Trading shaved about 10% of their $LDO position, sending $2 milly in tokens to Coinbase through an intermediary wallet
Still hold $21 milly worth pic.twitter.com/hpiVV9qzWu
— Andrew T (@Blockanalia) March 4, 2023
On Friday, Hoffman said in a video post that “many Wells announcements” had been circulated over the past week, adding, “I think Lido got one.” Shortly after the video went viral on Twitter, Hoffman took a step back. He pointed out that “although there is at least one verified Wells Notice that has emerged recently that is unknown to the public,” there is no certainty. “It seems there are rumors that Lido has been caught on target by Gary the Destroyer,” citing SEC Commissioner Gary Gensler, who has become persona non grata due to perceived hostility in some cryptocurrency circles.
Market responds to rumors
It is unclear how the SEC will notify Lido. The staking service is technically run by the Lido DAO (decentralized autonomous organization), meaning it lacks a formal leadership structure. Although Hoffman retracted his remarks, the market appeared to be responding to his Wells claims; The LDO price has dropped 10 percent in the last 24 hours. Andrew Thurman of crypto analytics firm Nansen tweeted that Wintermute, one of the largest crypto market makers, has sold about 10 percent of its LDO assets, or $2 million. Thurman speculates that the sale was related to the Wells rumor.
Friday’s Wells notice debacle comes amid wider crypto industry pressure by US securities regulators. As we reported on cryptokoin.com, last month stablecoin issuer Paxos confirmed that a Wells Notice was sent to it on Feb. The SEC said it is considering accusing Paxos of operating an unregistered security with its Binance-linked BUSD stablecoin.
Regulatory questions against staking services are on the agenda
Lido, a liquid staking platform, helps users lock or “stack” tokens to gain interest and help secure the Ethereum Blockchain. According to Dune Analytics, Lido currently accounts for 31 percent of all staked ether (ETH). The $8 billion staked in Ethereum through Lido, a decentralized service, makes it the largest Ethereum staker. Last month, crypto exchange platform Kraken agreed to shut down its own staking service in an agreement with the SEC. This has raised regulatory questions for similar services, both centrally controlled and operated by the DAO.
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