Lido token (LDO) plummeted by almost 20% since Friday after the rumors of a Securities and Exchange Commission (SEC) Wells Notice.
As the SEC cracks down on Web3 firms, a rumor from the Bankless Show negatively impacted the price of the LDO. David Hoffman, the show host, talked about the rumors of Lido getting a Wells notice, and the price formed a low after correcting 20%.
Later the podcaster apologized for spreading the rumor and informed that Lido did not receive a Wells notice.
Lido Caught in the Crosshairs of Gary the Destroyer
In the widely circulated video, Hoffman said, “Many wells notices have been issued to many of the DeFi apps. Wells notices have got shot out across the industry in the last week. It has not come to light yet.” He later added, “I think Lido got one.”
Investopedia says, “A Wells Notice is a formal notice from the SEC informing a recipient that the agency is planning to bring enforcement actions against them.”
Lido has one of the highest Total Value Locked (TVL) amongst the Decentralized Finance (DeFi) projects. According to DefiLlama, it has a TVL of over $9.14 billion. After the video got viral on Twitter, Lido’s price crashed by nearly 20%. According to data from TradingView, the LDO price opened at $3.018 on Friday but formed a low of $2.416 on Saturday.
After clarification of rumors from Hoffman, the Lido price gave a slight bounce and is currently trading at $2.67 as of writing.
SEC Clampdown on Crypto
Although Hoffman wrote a post clarifying Lido rumors, he believes at least one confirmed Wells Notice has gone out recently. He writes, “After checking in with other sources, it seems generally assumed that there are Wells Notices out there that are unannounced, but it’s impossible to tell how many, or how recently they’ve been served.”
The SEC has been causing havoc amongst crypto companies. An SEC lawyer recently alleged in a hearing that Binance.US offers unregistered security.
Chairman Gary Gensler strongly believes that every digital asset other than Bitcoin is a security. Last month, Paxos, the issuer of BUSD, had to terminate its relationship with Binance due to pressure from the SEC.
Before that, the crypto exchange Kraken was fined $30 million and ordered to close its staking reward facilities.
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