W3BStation
Markets
BTC $96,420 +2.34% ETH $3,280 +1.82% SOL $185.40 -0.92% BNB $642.50 +0.45% XRP $2.18 +3.12% DOGE $0.082 -1.50% ADA $1.05 +0.80% AVAX $42.10 +1.15%
BTC $96,420 +2.34% ETH $3,280 +1.82% SOL $185.40 -0.92% BNB $642.50 +0.45% XRP $2.18 +3.12% DOGE $0.082 -1.50% ADA $1.05 +0.80% AVAX $42.10 +1.15%
03/05/2023

Lido Finance's LDO Token Declines Amid SEC Rumors

David Hoffman, a notable crypto influencer, has sparked rumors that the SEC issued a Wells Notice to the decentralized staking solution, Lido Finance. Lido Updates Development Plans on Layer-2 Platforms Lido Finance's LDO token has been on a downward trajectory following speculation about a potential Wells Notice from the U.S. Securities and Exchange Commission (SEC). "In the past week… Wells notices have been distributed everywhere" ~ @TrustlessState discussing inside rumors re: DeFi protoco

Lido Finance's LDO Token Declines Amid SEC Rumors

David Hoffman, a notable crypto influencer, has sparked rumors that the SEC issued a Wells Notice to the decentralized staking solution, Lido Finance.

Lido updates development plans on Layer-2 platforms

Lido Updates Development Plans on Layer-2 Platforms

Lido Finance's LDO token has been on a downward trajectory following speculation about a potential Wells Notice from the U.S. Securities and Exchange Commission (SEC).

"In the past week… Wells notices have been distributed everywhere" ~ @TrustlessState discussing inside rumors re: DeFi protocols pic.twitter.com/zDd2YYCEvQ
— Mike Dudas (@mdudas) March 3, 2023

The speculation began with David Hoffman, host of the popular crypto podcast "Bankless," who revealed on his livestream on March 4 that he had heard Lido and several other crypto projects had received Wells Notices from the SEC. However, Hoffman quickly walked back his claim, telling CoinDesk it was a "miscommunication between me and a lawyer friend."

A Wells Notice is a formal communication from the SEC to companies it intends to sue, outlining the specific charges the agency plans to bring. That said, a Wells Notice is not the final step in the SEC's enforcement process. According to Investopedia, recipients typically have 30 days to respond with a legal brief called a Wells Submission, which makes the case against the proposed charges.

Despite Hoffman's retraction, the rumor sent shockwaves through Crypto Twitter and spread quickly across the ETHDenver 2023 conference in Colorado—one of the biggest crypto events in the U.S.—which was underway at the time. If true, it would signal that the SEC is ramping up its scrutiny of both Ethereum and crypto staking services.

Andrew Thurman from Nansen also tweeted that Wintermute, one of the largest crypto market makers, had sold 10% of its LDO holdings—worth roughly $2 million. Thurman suggested the sell-off may have been triggered by the rumors, though Wintermute CEO Evgeny Gaevoy told CoinDesk it was simply a "coincidence."

Even after Hoffman's clarification, market sentiment stayed negative, with LDO closing in the red for two consecutive days and trading around $2.545.

LDO/USDT 1-Hour Chart on Binance as of 10:25 AM, March 6, 2023

With $8 billion in ETH staked on its platform—roughly 31% market share—Lido Finance is the largest liquid staking solution in crypto. Lido lets ETH holders earn staking rewards while receiving stETH tokens that can be deployed across other DeFi applications.

This is just the latest episode in the SEC's ongoing crackdown on the crypto industry. Last month, Paxos received a Wells Notice from the SEC on February 3, with the agency accusing Paxos of violating investor protection laws and issuing an unregistered security—specifically, the BUSD stablecoin tied to Binance. The SEC also recently forced Kraken to permanently shut down its staking service.