EigenLayer Announces Isolated Exploit Resulting in Loss of 1.6M EIGEN Tokens Worth $5.5M

Ethereum restaking protocol EigenLayer announced there was an "isolated" exploit of an investor's token transfer, resulting in the loss of over 1.6 million EIGEN tokens worth some $5.5 million.

Ethereum restaking protocol EigenLayer announced on Saturday that there was an “isolated” exploit of an investor’s token transfer, leading to the sale of over 1.6 million EIGEN tokens — worth some $5.5 million — less than a year since the airdrop date.

The protocol’s statement came after traders raised issue with the sale of $5.5 million in EIGEN Friday, with some saying the sale may have violated the token lockup period as the digital coins were sold less than a year since the airdrop date. EIGEN tokens were air-dropped on May 10.

An Erroneous Transfer of Investor Tokens

On Saturday, EigenLayer said it was looking into the “unapproved selling activity” of a specific wallet. Later in the day, the protocol confirmed there had been an “isolated incident” of a malicious attacker compromising “one investor’s transfer of tokens into custody.”

“As a result, 1,673,645 EIGEN tokens were erroneously transferred to the attacker’s address,” the team behind the protocol said. They added that the attacker has since sold the tokens through a decentralized swap platform and moved stablecoins to centralized exchanges.

Some of the funds have been frozen, and EigenLayer is communicating with the platforms that the exploiter engaged with, as well as law enforcement.

The team clarified that there was no impact on the broader ecosystem, but users have raised concerns over the development.

Crypto Users Raise Doubt Over Transfers

Some cryptocurrency users on X doubt that the incident was from a malicious attacker. Instead, some suggested that it could have been an “insider” job. One user went as far as accusing the protocol’s developer of being the one who could have messed with the transfer and then sold off the tokens.

An Instadapp analyst pointed out that EigenLayer first sent 1 EIGEN token to “test” the address first, so it was confusing how the team now said there was a malicious exploit of the token transfer.

The protocol’s team has yet to respond to questions regarding the transfer, as no further details have been provided so far.

September Crypto Losses to Exploits Down Significantly

News about the EigenLayer compromise came days after blockchain security firm SlowMist revealed that the estimated losses in the crypto space due to scams and frauds in the past month exceeded $170 million.

On the other hand, the said figures are much smaller than the losses in August, which reached $316 million, and losses in July, which were at nearly $300 million. Among the top incidents last month, as per SlowMist, were contract vulnerabilities, private key leaks, and account breaches.