EigenLayer Blames Presumed $5.6M Insider EIGEN Dump On Email Compromise

EigenLayer, the largest restaking protocol with more than $11 billion in total value locked (TVL), has responded to fears that an insider offloaded $5.6 million worth of its native EIGEN token last week.

On Oct. 4, EigenLayer revealed that an email thread concerning the transfer of 1.67 million EIGEN tokens to an early investor was compromised by a malicious actor, resulting in the funds being transferred to the attacker’s wallet address.

The incident resulted in the attacker selling the EIGEN tokens for stablecoins via a decentralized exchange, before moving the stablecoins onto centralized platforms. EigenLayer said that it engaged the centralized exchanges and law enforcement, leading to the freezing of a portion of the ill-gotten assets.

“The compromise has not impacted the broader ecosystem,” EigenLayer said. There is no known vulnerability in the protocol or token contracts and this compromise was not related to any on-chain functionality.”

The investigation came several hours after on-chain analytics firms flagged large sales of EIGEN tokens recently transferred from a team address.

“A wallet sold all 1.67M $EIGEN via MetaMask at $3.3 after receiving it from the EigenLayer team wallet,” Lookonchain, an on-chain analyst posted on X.

The incident ignited speculation that an EigenLayer insider was trading the tokens in violation of the project’s vesting schedule, which prevents EigenLayer investors or team members from selling any EIGEN tokens until at least Sept. 30, 2025 — 12 months after stakedrop recipients’ tokens unlocked.

The price of EIGEN is up 10.7% over the past 24 hours after dipping to a weekend low of $3.08, according to The Defiant’s crypto price feeds. EIGEN is down 20% since tagging a high of $4.47 on Oct. 1.

Early investor staking backlash

This event comes amid growing tension within EigenLayer's community over the rules surrounding insider token allocations.

Last week, EigenLayer faced criticism for inadequately disclosing early investors who participated in the project’s $14.4 million 2022 seed round, $50 million Series A round in February 2023, and $100 million Series B round in February to stake their EIGEN.

On-chain analysis indicated that nearly 40% of all staked EIGEN tokens were held by just 13 addresses calling into question the transparency of EIGEN distributions.

EigenLayer responded by updating its documentation to state that “Eigen Labs investors are not restricted from staking EIGEN on EigenLayer."