KEY POINTS
- EigenLayer first said it was investigating an 'unapproved selling activity' on a specific account
- The team then said a 'malicious attacker' compromised an investor's transfer of tokens
- Some crypto users doubt that the exploit could have been carried out by an 'insider'
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.
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.
Community Update:
— EigenLayer (@eigenlayer) October 4, 2024
In an isolated incident this morning, an email thread involving one investor’s transfer of tokens into custody was compromised by a malicious attacker.
As a result, 1,673,645 EIGEN tokens were erroneously transferred to the attacker’s address. The attacker…
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.
Insidooooorrrr
— ALΞ❌Nomads 🦇🔊 (@AlexNomads) October 5, 2024
dev sold lol
— Joeft (@joejpeg) October 4, 2024
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.
you sent 1 eigen test tx first, what kind of "malicious attacker" are you talking about? https://t.co/rxiQyvU7K4 pic.twitter.com/sYSM49rKqo
— DeFi Made Here (@DeFi_Made_Here) October 4, 2024
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.
