Investigation EigenLayer to Wallet Selling $5.5 Million Worth of EIGEN Tokens

Bittime - The impressive project EigenLayer is being hit by an unpleasant problem, namely the illegal or unauthorized sale of EIGEN tokens.

Quickly, EigenLayer immediately carried out a thorough investigation to find out the parties causing the problem.

The illegal sale of EIGEN tokens occurred within two days via an exchange on MetaMask.

EigenLayer Investigation Steps

EigenLayer immediately took action against the illegal sale of illegal tokens with large amounts by conducting an investigation.

After an ongoing investigation, EigenLayer discovered that funds had been mistakenly sent to an address belonging to the attacker. 

The exploit occurred through the use of an email thread, in which the attacker's address was entered in place of a legitimate custodian wallet. 

For now, most of these funds have now been frozen.

EigenLayer also announced that it is investigating a suspicious wallet that transferred $5.5 million worth of EIGEN tokens. 

The transaction occurred a few days after EIGEN's opening, when the wallet received its first allocation of 1,673,644.66 tokens.

Read Also: EIGEN Tokenomics and EigenLayer Advantages

EigenLayer Investigation Details

Almost simultaneously with the emergence of an official statement from EigenLayer regarding their investigative efforts, a post appeared containing fraud and fake EigenLayer.

In the case of the breach of EIGEN token transactions worth $5.5 million, it started with a malicious link spread on social media trying to drain funds from user wallets by pretending to be a link to revoke permission for the EigenLayer contract. 

However, the link actually gives consent to a dangerous contract. 

However, the impact of the token sale is still limited and no other funds are at risk.

Suspicious Wallet and Chronology

Suspicious wallets receive tokens directly from the EigenLayer treasury. 

After that, EIGEN tokens are sold for USDC, which is immediately moved to the new wallet address. 

The seller is not trying to find a cheaper way to exchange tokens, but prefers the convenience of using a MetaMask router.

The sale occurred days after EIGEN became available for trading on exchanges. 

The seller in question is not identified as an official EIGEN investor, but is simply a token owner who is supposed to get a gradual allocation of tokens. 

In this case, the seller managed to exchange all 1.67 million EIGEN tokens via MetaMask, allegedly violating the predetermined vesting schedule. 

The sale also follows several token transfers from early investors, who sold their tokens hours after trading began.

EigenLayer Advises Investors Not to Sell EIGEN

EigenLayer attempts to stop investors from selling their tokens. 

They are trying to convince retail investors, users, and ecosystem participants that early backers are committed to holding EIGEN tokens for the long term. 

However, some early backers, such as Justin Sun, have already sold some of their holdings, although they still retain some shares.

Just before the token launch, EigenLayer updated their documentation. 

Through this update, investors can still earn programmatic rewards and staking rewards from EIGEN, even though their tokens are still locked and not yet fully vested.

Such actions by EigenLayer aim to reassure retail buyers and recipients that EIGEN tokens are safe and will not be affected by insider sales. 

However, the emergence of "whales" (large holders) whose tokens should still be locked actually damaged EigenLayer's reputation.

Read Also: EigenLayer Price Skyrockets, Traders Do Not Doubt the $5.5 Million Scandal and Justin Sun's Selling Action

EigenLayer Tries to Restore Reputation

Currently, EIGEN is still in the early stages of price discovery, with very high buying and selling activity. 

The market also absorbed an additional 1 million EIGEN tokens, which were often offset by purchases from other large holders. 

However, EigenLayer appears to be losing control of its tokens, having attempted to launch the tokens in stages to prevent a significant drop in value.

Hope on EIGEN Token

In the initial period of trading, EIGEN's market capitalization reached approximately $674 billion. 

The EIGEN token is expected to follow in the footsteps of Celestia (TIA), which managed to reach a market capitalization of $1 billion shortly after starting trading. 

Both projects offer similar services, namely providing a data availability layer for the L2 chain. 

However, unfavorable market cycles and exhaustion from airdrops caused EIGEN's price to decline after its launch.

Prior to EIGEN's launch and trading, the total value locked (TVL) of the EigenLayer protocol fell 50% from its peak, namely from $20 billion in May to just over $10 billion currently. 

EigenLayer attempted to position itself as a flagship project, but had to face challenges from airdrop fatigue, non-transparent distribution, and recipients rushing to sell their tokens.

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