On Saturday, the LDO token, which is associated with the Ethereum staking protocol Lido, plummeted by 10% in value. This was a result of rumors that the U.S. Securities and Exchange Commission had sent a Wells Notice to the service.
The cryptocurrency industry was struck by a wave of panic following the news. David Hoffman, host of the Bankless crypto podcast, was quick to spread the rumor on a video stream, claiming that multiple Wells Notices had been issued, including one to Lido. However, Hoffman later refuted his statement, claiming that although one Wells Notice had been sent out, the claims of a “carpet bomb” were not correct.
When asked to comment, a spokesperson for Lido declined to do so. This has left the cryptocurrency community to speculate as to whether the protocol has actually received a Wells Notice. If it has, it could indicate that the SEC is increasing its scrutiny of Ethereum crypto staking services.
The rumors caused further uproar at ETHDenver, one of the largest crypto industry gatherings of the year. Commissioner Gary Gensler is seen as an unfriendly figure in the crypto space, and is referred to as “Gary the Destroyer” by many. It remains to be seen what the outcome of these rumors will be.
Crypto staking service Lido has seen its LDO token receive a hit following rumors that the company has been served with a notice from the U.S. Securities and Exchange Commission (SEC). Speculation of the SEC warning had been circulated on social media, but the company has yet to confirm the news.
Despite the lack of confirmation, the LDO token sunk by 10% over the last 24 hours, with crypto analytics firm Nansen reporting that Wintermute, one of the largest crypto market makers, sold around $2 million in LDO assets. It has been suggested that the sell-off was linked to the Wells rumor.
The SEC has been intensifying its crackdown on the crypto industry, with Paxos receiving a Wells Notice last month. The regulator suggested it was considering charging Paxos with operating an unregistered security in relation to its BinanceBUSD stablecoin.
Lido is a liquid staking platform that helps users stake tokens to earn rewards in addition to helping secure the Ethereum blockchain. According to ETH.com, the company currently has 31% of all staked Ethereum (ETH).
The news of Lido’s alleged notice follows Kraken’s settlement with the SEC last month, which saw the crypto exchange agree to shut down its staking services. This settlement caused a stir in the crypto staking landscape, raising questions over similar services, both centrally controlled and DAO-operated.
