‘Sorry for spreading a rumor’, says podcaster on Lido’s FUD

Co-founder of content studio Bankless David Hoffman apologized for spreading rumors about what he called a “Wells Notice Carpet Bombing” targeting crypto firms, including the decentralized finance protocol Lido Finance. 

“Carpet bombing” was a reference to an allegedly flood of well notices sent to crypto firms last week, Hoffman was told by a source. He shared the unverified information on March 3 during the Bankless Show podcast.

“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 said, before noting that “I think Lido got one.”

On the same day, Hoffman clarified on Twitter that Lido had denied the claim and apologized for naming the protocol in the rumor. “Lido doesn’t deserve to be focused on specifically here,” he said, before reiterating that unannounced wells notices had been sent to crypto companies:

“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 rumor led to nearly a 20% decrease in the Lido DAO (LDO) token price on March 3, according to CoinMarketCap data. Lido Finance did not respond immediately to Cointelegraph’s request for comment.

Update on the “Wells Notice Carpet Bombing” statements in the Weekly Rollup

I checked in with my source, and have some clarifications to make.

1. Timing and concentration

I said that “Many Wells notices have been distributed In the last week or so”.

The “week” part is… https://t.co/1TzUWYyxVd

— DavidHoffman.bedrock _ (@TrustlessState) March 3, 2023

A wells notice is a warning sent by a regulatory authority to inform about violations found through an investigation. Essentially, it’s a letter telling a company about an impending enforcement action. 

Stablecoin issuer Paxos recently received a wells notice from the United States Securities and Exchange Commission (SEC) for allegedly violating investor protection laws in relation to its Binance USD (BUSD) token, which the commission claims is an unregistered security.

Rumors about wells notices recently hit the USD Coin issuer Circle. Circle Pay’s chief strategy officer and head of global policy, Dante Disparte, quickly debunked the speculation, Cointelegraph reported.