EIGEN Airdrop Non-Transferable, So Is There Something Behind Scam Claims?

Key Takeaways

• EigenLayer has opened claims for the EIGEN airdrop.
• However, recipients won’t be able to transfer airdropped tokens straight away.
• The move to restrict transfers has fueled criticism of the project.

After months of anticipation, the Ethereum liquid staking platform EigenLayer opened claims for the EIGEN airdrop on Friday, May 10. But the distribution comes with a catch. Tokens are geo-locked and non-transferable until an unknown date in the future.

The decision to impose restrictions on EIGEN transactions has fueled criticism of the project, with some observers calling foul play. But others argue that it is a shrewd move that could protect the company from regulatory pressure.

Controversy Over EIGEN Distribution

From the outset, many users have said EigenLayer’s token distribution plan is unfair. 

Out of the total supply of 1.67 billion EIGEN, only 15% are allocated to airdrops and only 5% to the first round. Meanwhile, investors and the EigenLayer team will receive 29.5% and 25.5% respectively.

Adding to the outrage, when the airdrop was finally initiated, users discovered that they wouldn’t be able to transfer their tokens straight away. A geo-fencing policy also blocks users in many countries, including the US, from receiving EIGEN.

Airdrop Restrictions

Some people have warned EIGEN’s airdrop restrictions should act as red flags to investors . For instance, influential crypto trader Ran Neuner called EigenLayer “a traditional VC scam […] where VC insiders fleece retail investors.”

However, others have pointed out that given regulatory uncertainty in the US and elsewhere, non-transferability and geo-fencing could protect the token issuer from legal liability further down the line.

Anticipating an SEC Investigation?

In light of the US Securities and Exchange Commission’s current approach to crypto assets, EigenLayer’s decision to restrict access to the airdrop could be viewed as a precautionary measure.

The SEC has made it clear that it views most tokens as securities. Issuing EIGEN directly to customers in the US could therefore open the company to a Ripple-style lawsuit alleging an unregistered securities offering.

In a similar vein, as long as the token remains non-transferable, it would be difficult for the SEC to argue that it falls under US securities law. By foreclosing the possibility of transacting (at least for now) the EIGEN airdrop conveniently sidesteps the entire debate over whether or not the token passes the Howey Test .