In its latest "weekly rollup" episode last Saturday (March 4), popular crypto podcast Bankless spread a rumor that the Security and Exchanges Commission (SEC) was going after staking platform Lido ($LDO), causing the latter to dip by roughly 20% from a resistance level of $2.6 based on data from CoinMarketCap.
The rumor suggests that the SEC has issued a Wells Notice to Lido, meaning that the commission is planning to pursue enforcement actions against the liquid staking platform. A Wells Notice is an SEC form that is sent to the target of an SEC investigation, informing them that the SEC staff has recommended legal action.
The SEC's investigations into crypto firms, in particular with protocols involved with staking and liquidity provision, has prompted contributors to Lido Finance's DAO to highlight the risks and impact of the SEC's continuing investigations.
“The biggest risk I personally see as a U.S.-based person is if they come down and say you can no longer even interact with or contribute to these types of protocols.” shares Jacob Blish, business development lead at Lido DAO.
This, of course, in the wake of the SEC clamping down hard on crypto exchanges for the alleged selling of securities. The SEC has recently ordered crypto exchange giant Kraken to cease its staking operations and pay a fine of $30 million. SEC chairman Gary Gensler has also rather infamously claimed that all digital assets other than Bitcoin are securities.
Following the podcast episode and the subsequent dip in Lido's price, Bankless host David Hoffman was quick to take to Twitter and apologize. He then clarified that "Lido isn't confirmed specifically." However, this does not let Lido and its users off the hook, as the SEC has been handing out Wells Notices to decentralized finance (DeFi) apps left and right over the past week as noted by Hoffman. Whether Lido will be next is still a matter of speculation.
Lido has been one of the more popular and successful liquid staking platforms with over $9 billion in Total Locked Value (TVL). Its liquid staking is expected to get a sharp boost to its growth following the much-awaited Shanghai upgrade for Ethereum this April.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.