Ethena Labs, a synthetic dollar system, is under fire for allegedly squandering 180 million ENA tokens on a crypto farming event.
Ethena Labs, an Ethereum-based synthetic dollar protocol, is under close watch after reportedly using 180 million ENA tokens in its own crypto farming event, causing a 6.01% dip in ENA’s price.
The team allegedly staked 25% of all ENA in the Season 3 farming event, raising concerns about potential dilution of rewards for regular participants and sparking ethical debates within the crypto community.
Allegations of Token Misuse in Season 3 Event
Ethena Labs came under fire on October 27 when crypto investigator Nomad accused the team of using 180 million ENA tokens to participate in its Season 3 farming event, thereby earning Satoshi rewards designed for ecosystem participants.
ENA’s price dropped to around $0.33 following the news, while Ethereum remained steady at approximately $2,512.
The situation intensified after reports that six Ethena-linked wallets staked ENA in the event, accumulating substantial Sats and Ethereal ETRL points.
Nomad’s findings suggest that these wallets received the ENA from a Coinbase Prime Custody address, initially intended for the Ethena Foundation and core team.
Following the event’s launch in September, these wallets achieved significant gains, sparking suspicion that Ethena insiders could be influencing reward distribution.
Ethena responded, asserting that foundation-owned tokens were “entitled to participate” in the event.
Ethena Denies Insider Trading Allegations
In response, Ethena Labs issued a statement refuting claims of staked team or investor tokens for personal gain, including Ethereal rewards.
The team assured users on Discord that all ENA tokens from those wallets were unlocked according to the official vesting schedule.
The foundation also clarified that these foundation-held tokens should not qualify for airdrops or similar rewards.
Ethena announced an upcoming UI update to provide transparency, showing the total sENA eligible for airdrops and excluding undistributed sENA in Liquifi contracts.
Lingering Concerns Over Ethena’s Transparency
Nomad’s report highlights prior issues in Seasons 1 and 2, where irregularities led to some users incurring financial losses.
This history has heightened community concerns about Ethena Labs’ transparency and commitment to fairness.
With approximately $2.6 billion of user funds under its management, trust in Ethena’s clarity and transparency is critical.
Despite the scrutiny, Wintermute, an algorithmic trading firm, recently accepted Ethena’s USDe token as collateral for over-the-counter (OTC) trading.
This arrangement allows Wintermute customers to use USDe for various trading activities, suggesting that, despite the controversy, Ethena’s assets continue to gain traction.
