Lido’s LDO token drops 10% after rumours of SEC notice

An SEC Wells Notice is a letter outlining the accusations the agency is thinking about pressing against the receiver

After a rumour that the U.S. Securities and Exchange Commission (SEC) served the biggest Ethereum staking service with a Wells Notice, Lido’s LDO token dropped 10 per cent on Saturday.

A Securities and Exchange Commission Wells Notice is a letter outlining the allegations the agency is considering against the receiver. David Hoffman of the Bankless crypto currency podcast said on Friday that he had heard Lido and other crypto ventures have received Wells Notices. He later withdrew the claim.

Hoffman said that his comments to CoinDesk were the result of ‘a misunderstanding between me and a lawyer friend.’

But, the report sparked concerns on Twitter and quickly travelled across the Colorado convention centre where ETHDenver, one of the largest gatherings of the year’s crypto industry, was taking place. If the claims are true, it would mean that the Securities and Exchange Commission is expanding its investigation into Ethereum and crypto currency staking.

Hoffman said on camera on Friday that ‘several Wells notices’ had been handed out over the past week, and that ‘I guess Lido got one.’ Hoffman changed his mind soon after the video went viral on Twitter.

He referred to Securities and Exchange Commission Commissioner Gary Gensler, who has earned the nickname ‘Gary the Destroyer’ in some crypto currency circles due to the belief that he is hostile to the sector, saying that there had presumably been whispers that Lido was in his crosshairs. Lido team members have contacted me and stated that this is untrue.

The market appeared to respond to Hoffman’s Wells remarks in spite of his renouncement; the price of LDO has fallen 10 per cent over the last day.

One of the largest crypto currency market makers, Wintermute, sold off nearly 10 per cent, or $2 million, of its LDO holdings, as per a tweet by Andrew Thurman of the crypto analytics company Nansen. Evgeny Gaevoy, CEO of Wintermute, told CoinDesk that the timing was ‘coincidental,’ contrary to Thurman’s speculation that the sell-off was tied to the Wells report.