Ethena Labs denies misusing 180m ENA tokens

Ethena Labs has refuted allegations that it unfairly used its 180 million tokens to earn rewards from a crypto farming event it hosted.

Crypto researcher Nomad accused synthetic dollar issuer Ethena Labs of participating in the Season 3 farming program with approximately $61 million worth of (ENA) coins obtained from a Coinbase Prime wallet address. According to the Web3 detective, the Ethena team’s wallets split approximately 25% of ENA’s total supply during farming events.

This allegedly allowed insiders to exploit the system and bypass real users. Nomad also claimed that the tokens should be locked and non-fungible. The issue follows previous controversies surrounding the protocol’s Season 1 and Season 2 reward initiatives.

Warning: Important Notice for ENA/USDe Holders

The Ethena team is currently using 180 million ENA tokens (25% of the SENA supply earning sats) to collect sats in Season 3, effectively reducing the rewards for other participants. This raises significant concerns about the team’s ethics.

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— Nomad (@Nomad02887202) 27 October 2024

Ethena Labs’ response

Ethena Labs issued a statement denying the allegations, arguing that the tokens in question had already been opened in accordance with the publicly disclosed vesting schedule. The protocol denied the insider trading allegations and stated that flagged wallets would not be eligible for rewards or airdrops.

The wallets in question contain unlocked base tokens that meet the appropriate criteria. However, the foundation has confirmed to us that these tokens *DO NOT* receive any airdrop or related rewards from Ethereal.

Ethena Labs statement

Nomad’s claims and the community’s skepticism have contributed to the platform’s contentious history since launching stablecoin USDe (USDE). Crypto leaders like Andre Cronje have expressed doubts about the token’s design and collateral system; this system bore similarities to the exploding Terraform coin UST.

Despite a rocky road, USDe’s market cap is $2.61 billion and Ethena Labs has secured a stablecoin partnership with Wall Street mammoth BlackRock. The Ethereum-based project has also launched a community proposal to build a crypto exchange built around USDe.