Ethena Labs Faces Scrutiny Over Misuse of 180M ENA Tokens

Ethena Labs Under Fire: Allegation of Misuse ENA Token Farming Event

Ethena Labs, an Ethereum-based synthetic dollar protocol, is facing scrutiny after allegations surfaced regarding the misuse of 180 million ENA tokens in a crypto farming event. The accusations, raised by crypto investigator Nomad, claim that the Ethena team has staked 25% of the total ENA (SENA) in its ongoing Season 3 farming event, a move that potentially dilutes rewards for regular participants and raises ethical questions. 

The incident has sparked widespread discussions in the crypto community, with many questioning Ethena’s transparency and governance practices.

Six Wallets Allegedly Tied to Ethena in the Spotlight

The controversy began when six wallets, reportedly linked to Ethena Labs, staked ENA tokens in the farming event and accumulated substantial rewards, including Sats and Ethereal (ETRL) points. Nomad’s report indicates that these wallets received 180 million ENA tokens from a Coinbase Prime Custody address, which allegedly holds locked ENA tokens designated for the Ethena Foundation and core team. 

Following the SENA staking event launch in September, these wallets made significant gains, sparking concerns that Ethena's involvement could skew rewards distribution in favor of insiders. Ethena has responded to these allegations by asserting that the staked ENA tokens in question are foundation-owned and thus eligible for participation. 

However, no formal statement has been released detailing the potential impact on the protocol’s decentralized finance community. The lack of immediate transparency has left many ENA token holders and participants wary, with some accusing the team of mismanagement and profit-driven motives.

Previous Staking Events Raise Further Concerns

Nomad’s report also highlights issues within Ethena’s previous staking events, citing anomalies in Season 1 and Season 2 that led to financial losses for some users. This history of complications has raised concerns among community members about Ethena's oversight and adherence to fair practices. 

With around $2.6 billion in user funds under management, the investigation stresses the need for transparency and clear revenue-sharing mechanisms to maintain trust in centralized finance operations. In a recent development, Wintermute, an algorithmic trading firm, announced that it now accepts Ethena’s USDe token as collateral for over-the-counter (OTC) trading activities. 

This partnership allows Wintermute’s clients to post USDe as collateral for a range of trading products, signaling a growing acceptance of Ethena’s assets despite the current controversy.