After a tumultuous week surrounding the newly launched EigenLayer token, Justin Sun has transferred 3.62 million EIGEN (valued at $14.1 million) to Binance.
Previously, Sun had acquired 5.24 million airdropped EIGEN (approx. $21.5 million at that time), sending it to HTX soon after the token became available for trading on October 1.
Following both deposits, a significant drop in price indicates that a large volume of EIGEN was sold alongside these transactions. After rising to $4.10 following Sun’s latest deposit, EIGEN is trading at around $4.00 according to data from CoinMarketCap.
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Although Justin Sun is accustomed to controversy, EigenLayer itself has recently faced criticism due to several missteps that have harmed its reputation.
EigenLayer claims to enhance Ethereum’s ‘trust network’ for other projects by reusing or ‘restaking’ already-staked ETH. However, its operational methods seem more reflective of a “trust me bro” approach, rather than leveraging Ethereum’s trust-minimizing smart contracts.
‘Unauthorized sales’ or phishing scam?
In spite of the common practice of using dedicated vesting contracts for locked tokens, EIGEN appears to have been allotted to investors based on an informal agreement not to sell before a specified date.
On Friday, EigenLayer took to X (previously Twitter) to announce a ‘community update’ regarding an investigation into “unauthorized selling activities” linked to a wallet that had received roughly 1.67 million EIGEN.
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fallen victim to a phishing email, stating that “an email thread regarding one investor’s token transfer into custody was compromised by a malicious actor.” Both updates had comments disabled.
As pointed out by X user DeFi_Made_Here, a test transaction was conducted prior to sending the full amount (almost $6 million at the time). Since the entire sum was indeed transferred, it appears that the confirmation of the test transaction occurred through the compromised email, rather than an alternative means of communication.
In September, crypto phishing schemes reportedly extracted approximately $46 million, as evidenced by data from ScamSniffer, with a single incident on September 29 accounting for $32 million of the lost total.
In the past, EigenLayer has faced scrutiny for permitting investors to liquidate via farming staking rewards with tokens that were supposedly locked, along with potential conflicts of interest concerning EigenLayer advisors and their roles at the Ethereum Foundation.
Sun remains under the spotlight
Recently, Protos has scrutinized proof of reserves (PoR) for exchanges linked to Sun, like HTX, which revealed several inconsistencies in the underlying assets, and Poloniex, whose PoR was found severely lacking, accounting only for its TRON holdings.
Notably, both exchanges were compromised in separate hacks within two weeks of each other last November.
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Given Sun’s involvement in such matters, concerns arise regarding his potential influence in the proposed modifications to wrapped Bitcoin, prompting DeFi lending platform Sky (formerly Maker) to vote on suspending new borrows.
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