• Bankless podcaster David Hoffman suggested that several DeFi companies, including Lido, had received Wells Notices in the past months.
• Lido denied receiving a notice and its native token LDO plummeted almost 20% on the rumor.
• The rumor was later debunked but LDO failed to recover from the initial drop.
Rumors of Wells Notice for DeFi Companies
Bankless podcaster David Hoffman said on Friday that multiple crypto companies, including decentralized finance (DeFi) ecosystem provider Lido, have received Wells Notices in the past months. A Well Notice is a formal document informing the recipient that the Securities and Exchange Commission (SEC) is about to bring enforcement actions against them.
Lido Denies Rumors
Despite Hoffman’s claims, Lido denied having received any such notice. However, holders of its native token LDO were still spooked by the rumors and dumped it almost 20%, according to data from CoinMarketCap.
Debunked Rumor
Hoffman backtracked on his statements soon after and apologized for spreading false information. He also mentioned his source informed him there had been multiple Wells Notices delivered to crypto companies in recent months with at least one company „recently, that isn’t known to the public.“
LDO Dumps 15%
The false rumor caused investors to panic sell their tokens and pushed down the price of LDO significantly despite being debunked soon after it started circulating on social media platforms like Twitter. The token failed to recover from this dump afterwards.
Conclusion
The rumor of DeFi companies receiving Wells Notices set off shockwaves throughtout Ethereum ecosystem as investors panicked over their investments when it spread last Friday but was debunked shortly after by both Hoffman and Lido itself. Despite clearing up confusion about these notices, it didn’t stop investors from dumping their tokens as they were unable to regain confidence in them afterwards which resulted in an almost 20% drop for native token before stabilizing again at a lower price point afterwards