Zcash (ZEC) suffered a dramatic price collapse after a critical vulnerability in its Orchard Pool was disclosed. Shielded Labs revealed the flaw, which had existed since 2022, could have allowed an attacker to print unlimited counterfeit tokens. The vulnerability went undetected for four years, undermining trust in the privacy coin's supply integrity. ZEC's price dropped 42% in 24 hours, triggering massive liquidations.
Arthur Hayes, chief investment officer at Maelstromfund and former BitMEX co-founder, announced he had liquidated his entire Zcash position after the disclosure. Hayes, previously a vocal supporter of Zcash, said the exploit violated his "narrative mental map" and decided to take profit on the entire position. He indicated he might reconsider buying back at lower prices if his assumptions prove incorrect.
Nasdaq-listed Cypherpunk Technology (CYPH), a corporate accumulator of ZEC, disclosed an unrealized loss of approximately $7.75 million on its holdings. As of May 13, the company held 314,185 ZEC, purchased at an average price of $337.86. Based on a ZEC price around $313, the paper loss highlights the risks of corporate crypto treasuries. The price later recovered slightly to $337.82, still down 37.79% from recent highs. Blockchain analytics firm Arkham noted that one large investor saw his $174 million ZEC stash lose over half its value.
The vulnerability was fixed on June 1, just days after discovery on May 29. However, the episode raises serious questions about the security auditing of privacy protocols and the risk management of institutional crypto holdings.
