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EigenLayer Investigates $5.5M Unauthorised EIGEN Token Sale; Possible Insider Breach
- EigenLayer has encountered significant turbulence following the release of its EIGEN token last week, after a hacker gained access to US $5.5m worth of coins.
- The attacker gained access to an investor’s email chain, re-routing some 1.6m Eigen from a custodian to the hacker’s wallets.
- The tokens were then swapped to stablecoins and stored across several centralised and decentralised exchanges.
- According to EigenLayer, the compromise has no bearing on the network’s on-chain security and is not the result of a bug or exploit.
Popular security network EigenLayer has endured a potential breach, with approximately US $5.5m (AU $8.1m) “stolen” from the protocol. The news emerged over the weekend that an isolated actor sold 1.6 million EIGEN (the blockchain’s native token) via several third-party exchanges.
Significantly, last week saw EigenLayer unlock over US $30m (AU $44m) worth of tokens, with the coin going live on centralised trading platforms for the first time.
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Eigen Hack a Result of an Email Compromise
Initially, EigenLayer developers were concerned that a team member, first-stage investor or “Early Contributor” may have been responsible, breaching the EIGEN token’s unlock schedule.
However, a day after the transaction was investigated, EigenLayer admins revealed that the sell-off was the result of a hack, rather than someone on the inside misbehaving.
According to the blockchain’s social media account, the attacker gained access to an email thread where an investor was transferring millions worth of EIGEN into custody. Unfortunately, instead of the tokens making it to the correct party, they fell into the hands of the hacker, who quickly funnelled the assets into stablecoins.
Authorities on the Case, Some Stolen Funds Already Frozen
EigenLayer has been firm that the incident has no bearing on the blockchain’s broader security, and that other investors are not at risk.
According to the team’s leaders, police have already been engaged and some of the stolen assets held on CEXs have been frozen.
The investigation will continue over the coming days as EigenLayer looks to find out the exact mechanisms of the hack and attempt to recoup the victim’s lost funds.
EigenLayer has experienced significant volatility since its token was unlocked on October 1st – to be expected when a coin first hits the crypto market.
EIGEN is down 12% since it debuted last week, however, its price has bounced back 3% in the last 24 hours of trading.
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Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
