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Ethena Labs Team Accused of Misusing 180M ENA Tokens
Ethena Labs is currently under investigation due to allegations that it unjustly staked 180 million ENA tokens in its crypto farming event.
Ethena Labs, a synthetic dollar protocol based on Ethereum, has been accused of participating in a crypto-farming event that it recently hosted, using 180 million Ethena tokens.
The Ethena Labs team allegedly owns 25% of the total staked ENA (SENA) in its Season 3 farming event, which is actively used for farming Sats. Sats are rewarded to users for participating in various actions in the Ethena ecosystem. Crypto investigator Nomad reported this information on October 27.
Nomad cautioned that the move would considerably diminish the rewards of legitimate participants, particularly Ethens Ethena USDe (USDE) holders while questioning the team's ethics.
Ethena did not immediately respond to Cointelegraph's request for comment regarding the allegations. Nevertheless, the protocol refuted the accusations of misconduct.
Six wallets in question are affiliated with Ethena Labs
In August, the Coinbase Prime Custody address received more than 3 billion ENA tokens, which were potentially secured for the Ethena Labs core team and the Ethena Foundation, according to Nomad.
Following the SENA staking launch in September, 180 million ENA tokens were transferred to six crypto wallets associated with Ethena from the Coinbase Prime Custody address in October. The Ethena leaderboard for Sat's farming has featured all six currencies.
In addition to Sat's farming, ethereal (ETRL) rewards were also obtained by wallets with potential connections to the Ethena team.
The investigators alleged the Ethena team's 180 million staked ENA tokens to have accrued 20% of all Ethereal points dedicated to its community members.
Nomad also underscored the significance of trust in the context of centralized finance entities:
“No one really knows how much funding revenue and staking revenue Ethena is generating from the $2.6 billion user fund or if it’s streaming all revenue to SUSDe holders.”
Previous staking events resulted in losses for Ethena users
Additionally, the investigator identified inconsistencies in the agricultural events that Ethena had previously hosted during Seasons 1 and 2, which had a detrimental effect on its users, mainly regarding financial losses.
The accusations against Ethena Labs piqued the interest of crypto community members on X, and a significant number of them encouraged the protocol to respond.
The deposited ENA in question is unlocked foundation tokens that are eligible for participation, according to Ethena. Additionally, the protocol will offer additional clarification to refute the allegations.
Wintermute, an algorithmic trading firm, disclosed on October 25 that it would accept Ethena's USDe as margin collateral for over-the-counter (OTC) trading.
Wintermute's clients can now post “USDe as collateral for options, [credit default swaps], forward, and spot trading” as a consequence of the partnership.