Blockchain analysis firms Nansen and on-chain detective ZachXBT uncovered a series of transactions that hint at potential wrongdoing by Arrington Capital. The accusations center around Arrington Capital’s relationship with EtherFi, which is behind the altcoin project ETHFI.
Relationship between Arrington Capital and altcoin ETHFI
According to reports, Arrington Capital, a private equity investor in EtherFi, minted a seemingly paltry $5,000 worth of eETH, EtherFi’s repurchase token, last month. But this was followed by a series of maneuvers that raised serious questions about fair play. The minted eETH was then suspiciously split between a round number of 10 different wallets, each receiving the same amount of 500 eETH.
These seemingly innocuous actions took a turn when these 10 wallets, apparently controlled by Arrington Capital, collectively requested a hefty sum of 200,498 ETHFI tokens during an airdrop event. This airdrop, which was intended to distribute the tokens to a wider audience, seemingly disproportionately benefited Arrington Capital.
EtherFi’s airdrop had a limit
The crux of the problem lies in EtherFi’s airdrop limit. To prevent any organization from accumulating excessive amounts of tokens, the platform has set a limit of 25,000 ETHFI per wallet. Arrington Capital appears to have bypassed this protection by splitting its assets across multiple wallets. Because it gained a significantly larger share from the airdrop.
The alleged airdrop limit has been exceeded, sparking outrage in the cryptocurrency community. The tactic employed by Arrington Capital bears a striking resemblance to the Sybil attack. In the cryptocurrency space, a Sybil attack involves creating multiple fake identities, usually in the form of wallets, to manipulate a system for personal gain. In this example, the exploited system appears to be EtherFi’s airdrop mechanism.
Were Arrington’s actions illegal?
The debate deepens further when the possible legal consequences are taken into account. If Arrington Capital had any inside information about the airdrop or the vesting period of the tokens, its actions may be considered illegal. Regulators are keeping a close eye on the cryptocurrency industry, and any instances of insider trading will likely be met with serious repercussions.
EtherFi attempted to douse the flames of controversy by stating that Arrington Capital was not aware of the details of the qualifying period because the decision was finalized shortly before the airdrop. However, this explanation does little to resolve the Sybil attack accusations. Arrington Capital, on the other hand, vehemently denied any wrongdoing. They claim that they did not exploit any vulnerabilities in the protocol’s distribution methodology.
To be informed about the latest developments, follow us Twitter’in, Facebookin and InstagramFollow on . Telegram And YouTube Join our channel.