Wells Notices are letters from the SEC outlining potential charges that might be filed.
The staking service is run by the Lido DAO (decentralized autonomous organization).
On Saturday, the value of Lido’s LDO token dropped by 10% on speculation that the U.S. Securities and Exchange Commission (SEC) had issued a Wells Notice to the biggest Ethereum staking provider.
Wells Notices are letters from the SEC outlining potential charges that might be filed against the receiver. After first saying he’d heard that Lido and other crypto projects had been issued with Wells Notices on Friday, David Hoffman of the Bankless crypto podcast then walked back his statement. If the reports are accurate, the SEC may be increasing its investigation into Ethereum and cryptocurrency staking.
Hoffman Backtracks
When “many Wells notices” were sent out last week, Hoffman said during Friday’s livestream, “I think Lido got one.” As the video became viral on Twitter, Hoffman quickly retracted his statement.
Hoffman stated:
“While there is at least one confirmed Wells Notice that has gone out recently, that isn’t known to the public, the idea of a mass recent carpet bomb isn’t correct.”
As he put it, “there have apparently been rumours of Lido being caught in the crosshairs of Gary the Destroyer,” referring to SEC Commissioner Gary Gensler, who has become famous in certain cryptocurrency circles because of the notion that he is unfavorable to the sector. “Members of the Lido team have reached out to me and said that this is false,” he added.
Just how the SEC would have notified Lido is unknown. Technically, the staking service is run by the Lido DAO (decentralized autonomous organization), which is essentially just a loose confederation of people who possess LDO tokens in Lido and make decisions without a central authority.