Ethena Labs Accused of Misusing 180M Tokens in New Crypto-Farming Event

Ethena Labs, an Ethereum-based protocol specializing in synthetic dollar assets, is facing allegations of misusing 180 million Ethena tokens (ENA) during a recent crypto-farming event.

The accusations, brought forward by crypto investigator Nomad, claim that Ethena Labs controls around 25% of the total staked ENA in its Season 3 farming initiative, which may distort the distribution of rewards meant for genuine participants.

In this event, participants farm “Sats,” an in-platform reward distributed for various actions within the Ethena ecosystem.

Ethena Labs’ Major Stake Expected to Dilute Sats Rewards

According to Nomad, Ethena Labs’ significant stake in the event is expected to dilute the Sats rewards for regular users, particularly Ethena USDe (USDE) holders.

The alleged involvement of the Ethena team in staking such a large number of ENA tokens has raised questions about transparency and fairness in how rewards are allocated.

Nomad reports that in August, over three billion ENA tokens were transferred to Coinbase Prime Custody, possibly meant for Ethena Labs’ team and the foundation.

2. August 23: A Coinbase Prime Custody address received 3B+ ENA tokens, exceeding total ENA circulation at the time according to Ethena’s vesting schedule.

It’s reasonable to believe this is the Coinbase prime custody address for locked ENA tokens for the Ethena Labs core team…

— Nomad (@Nomad02887202) October 27, 2024

Following the SENA staking launch in September, six crypto wallets connected to Ethena Labs purportedly received 180 million ENA tokens from the Coinbase Prime address.

These wallets appeared on Ethena’s leaderboard for Sats farming, receiving both Sats and additional Ethereal (ETRL) rewards.

Nomad claims these wallets gained 20% of all community-designated Ethereal points, a significant portion meant for community engagement.

The accusations cast a spotlight on Ethena Labs’ revenue and staking transparency, with Nomad pointing out a lack of clarity regarding the management of the $2.6 billion user fund and revenue distribution to SUSDe holders.

Nomad also noted similar inconsistencies in Ethena’s previous farming events, which allegedly resulted in financial losses for users.

In response, Ethena has stated that the staked ENA involved are unlocked foundation tokens “that would fit under the eligible criteria.”

“Nevertheless, the foundation has confirmed to us that these tokens will *NOT* be recipients of any airdrop or related rewards from Ethereal.”

We are aware of questions circulating in Discord and X as to whether investors or the Ethena team are earning Ethereal rewards via sENA using locked tokens.

We would like to categorically confirm to our community that absolutely no locked team or investor tokens are staked as… pic.twitter.com/v5SxgDwCTp

— Ethena Labs (@ethena_labs) October 28, 2024

Ethena Partners with Wintermute

Ethena has recently partnered with Wintermute, an algorithmic trading firm, to allow clients to use Ethena’s USDe as margin collateral for over-the-counter (OTC) crypto trading, expanding its reach in digital asset markets.

Last month, the project also announced the launch of UStb, a new fiat stablecoin.

Backed by the BlackRock USD Institutional Digital Liquidity Fund (BUILD) and in partnership with Securitize Markets LLC, UStb offers a distinct alternative to the existing USDe stablecoin.

BUILD, BlackRock’s first tokenized fund launched in March 2024 on a public blockchain Ethereum, allows investors to earn interest in U.S. dollars through Securitize Markets LLC.

UStb will be fully collateralized by BlackRock’s BUILD and Securitize, functioning similarly to a traditional stablecoin.